Die
Mercurii, 5° Februarii 1975
Note:
American Cyanamid principles
Guidelines set out in this case to establish whether an applicant has an adequate case for the granting of an interlocutory injunction. The guidelines consider:
• Whether the claimant had a strong or merely an arguable case.
• The adequacy of damages as a remedy.
• The balance of convenience.
• Whether the status quo should be maintained.
Parliamentary
Archives,
HL/PO/JU/4/3/1262
HOUSE
OF LORDS
AMERICAN CYANAMID
v.
ETHICON LIMITED
Lord Diplock
Viscount
Dilhorne
Lord
Cross of Chelsea
Lord
Salmon
Lord
Edmund-Davies
Lord
Diplock
MY LORDS,
This interlocutory appeal
concerns a patent for the use as absorbable
surgical sutures of
filaments made of a particular kind of chain polymer
known as "
a polyhydroxyacetic ester " (" PHAE "). These are
sutures of
a kind that disintegrate and are absorbed by the human
body once they
have served their purpose. The Appellants ("
Cyanamid "), an American
Company, are the registered
proprietors of the patent. Its priority date
in the United Kingdom
is October 2nd, 1964. At that date the absorbable
sutures in use
were of natural origin. They were made from animal
tissues
popularly known as catgut. The Respondents (" Ethicon "), a
sub-
sidiary of another American Company, were the dominant
suppliers of
catgut sutures in the U.K. market.
Cyanamid introduced their
patented product in 1970. The chemical sub-
stance of which it is
made is a homo-polymer, i.e. all the units in the chain,
except
the first and the last (" the end stabilisers"), consist of
glycolide
radicals. Glycolide is the radical of Glycolic acid,
which is another name
for hydroxyacetic acid. By 1973 this product
had succeeded in capturing
some 15 per cent, of the U.K. market
for absorbable surgical sutures. Faced
with this competition to
catgut, Ethicon who supplied 80 per cent, of the
market were
proposing to introduce their own artificial suture (" XLG
").
The chemical substance of which it is made is not a
homopolymer but a
copolymer, i.e. although 90 per cent, by weight
of the units in the chain
consist of glycolide radicals, the
remaining 10 per cent, are lactide radicals,
which are similar in
chemical properties to glycolide radicals but not identical
in
chemical composition.
Cyanamid contend the XLG
infringes their patent, of which the principal
claim is " A
sterile article for the surgical repair or replacement of living
"
tissue, the article being readily absorbable by living tissue and
being formed
" from a polyhydroxyacetic ester." As is
disclosed in the body of the patent,
neither the substance PHAE
nor the method of making it into filaments was
new at the priority
date. Processes for manufacturing filaments from PHAE
had been the
subject of two earlier U.S. patents in 1953 (Lowe) and
1954
(Higgins). The invention claimed by Cyanamid thus consisted
of the
discovery of a new use for a known substance.
On 5th March, 1973, Cyanamid
started a quia timet action against Ethicon
for an
injunction to restrain the threatened infringement of their patent
by
supplying sutures made of XLG to surgeons in the United
Kingdom. On
the same day they gave notice of motion for an
interlocutory injunction.
Voluminous affidavits and exhibits were
filed on behalf of each party. The
hearing of the motion before
Graham J. lasted three days. On 30th July,
1973, he granted an
interlocutory injunction upon the usual undertaking
in damages by
Cyanamid.
Ethicon appealed to the Court of
Appeal. The hearing there took eight
Jays. On 5th February, 1974,
the Court of Appeal gave judgment. They
allowed the appeal and
discharged the judge's order. Leave to appeal
from that decision
was granted by Your Lordships' House. It was estimated
that the
hearing in this House of the appeal at which leave to adduce
more
affidavit evidence was to be sought would last twelve days.
The question whether the use of
XLG as an absorbable surgical suture
is an infringement of
Cyanamid's patent depends upon the meaning to be
given to the
three words " a polyhydroxyacetic ester " in the principal
claim.
2
Cyanamid's contention is that at the date of publication
of the patent those
words were used as a term of art in the
chemistry of polymerisation not only
in the narrower meaning of a
homopolymer of which the units in the chain,
apart from the end
stabilisers, consisted solely of glycolide radicals but also
in
the broader meaning of a copolymer of which up to 15 per cent, of
the
units in the chain would be lactide radicals; and that what
was said in the
body of the patent made it clear that in the claim
the words were used in
this wider meaning.
Ethicon's first contention is that the words " a
polyhydroxyacetic ester "
in the principal claim bear the
narrower meaning only, viz. that they are
restricted to a
homopolymer of which all the units in the chain except the
end
stabilisers consist of glycolide radicals. In the alternative, as
commonly
happens where the contest is between a narrower and a
wider meaning in
a patent specification, they attack the validity
of the patent, if it bears the
wider meaning, on the grounds of
inutility, insufficiency, unfair basis and
false suggestion. These
objections are really the obverse of their argument
in favour of
the narrower construction. They are all different ways of saying
that
if the claim is construed widely it includes copolymers which will
not
have as surgical sutures the characteristics described in the
body of the patent.
Ethicon also attack the validity of the patent
on the ground of obviousness.
Both Graham J. and the Court of Appeal felt constrained
by authority to
deal with Cyanamid's claim to an interlocutory
injunction by considering
first whether, upon the whole of the
affidavit evidence before them, a prima
facie case of
infringement had been made out. As Russell L.J. put it in
the
concluding paragraph of his reasons for judgment with which the
other
members of the court agreed: —" If there be no
prima facie case on the
" point essential to entitle
the plaintiff to complain of the defendant's
" proposed
activities, that is the end of any claim to interlocutory relief."
" Prima facie case " may in some
contexts be an elusive concept, but the
sense in which it was
being used by Russell L.J. is apparent from an earlier
passage in
his judgment. After a detailed analysis of the conflicting
expert
testimony he said: —" I am not satisfied on the
present evidence that on the
" proper construction of this
specification, addressed as it is to persons
" skilled in the
relevant art or science, the claim extends to sterile surgical
"
sutures produced not only from a homopolymer of glycolide but also
from
" a copolymer of glycolide and up to 15 per cent, of
lactide. That is to say
" that I do not consider that a prima
facie case of infringement is established."
In effect what the Court of Appeal was doing was trying
the issue of
infringement upon the conflicting affidavit evidence
as it stood, without
the benefit of oral testimony or
cross-examination. They were saying " If we
" had to
give judgment in the action now without any further evidence we
"
should hold that Cyanamid had not satisfied the onus of proving that
their
" patent would be infringed by Ethicon's selling
sutures made of XLG." The
Court of Appeal accordingly did not
find it necessary to go into the questions
raised by Ethicon as to
the validity of the patent or to consider where the
balance of
convenience lay.
Graham J. had adopted the same approach as the Court of
Appeal; but,
upon the same evidence he had come to the contrary
conclusion on the issue
of infringement. He considered that on the
evidence as it stood Cyanamid
had made out a " strong prima
facie case" that their patent would be
infringed by
Ethicon's selling sutures made of XLG. He then went on to
deal
briefly with the attack upon the validity of the patent and came to
the
conclusion that upon the evidence before him none of the
grounds of
invalidity advanced by Ethicon was likely to succeed.
He therefore felt
entitled to consider the balance of convenience.
In his opinion it lay in
favour of maintaining the status quo
until the trial of the action. So he
granted Cyanamid an
interlocutory injunction restraining Ethicon from
infringing the
patent until the trial or further order.
The grant of an interlocutory injunction is a remedy
that is both temporary
and discretionary. It would be most
exceptional for your Lordships to give
leave to appeal to this
House in a case which turned upon where the balance
3
of convenience lay. In the
instant appeal, however, the question of the
balance of
convenience, although it had been considered by Graham J. and
decided
in Cyanamid's favour, was never reached by the Court of Appeal.
They
considered that there was a rule of practice so well established as
to
constitute a rule of law that precluded them from granting any
interim
injunction unless upon the evidence adduced by both the
parties on the hear-
ing of the application the applicant had
satisfied the court that on the balance
of probabilities the acts
of the other party sought to be enjoined would, if
committed,
violate the applicant's legal rights. In the view of the Court
of
Appeal the case which the applicant had to prove before any
question of
balance of convenience arose was "prima facie
" only in the sense that the
conclusion of law reached by
the court upon that evidence might need to be
modified at some
later date in the light of further evidence either detracting
from
the probative value of the evidence on which the court had acted
or
proving additional facts. It was in order to enable the
existence of any such
rule of law to be considered by your
Lordships' House that leave to appeal
was granted.
The instant appeal arises in a
patent case. Historically there was
undoubtedly a time when in an
action for infringement of a patent that was
not already "
well established ", whatever that may have meant, an
interlocu-
tory injunction to restrain infringement would not be
granted if counsel for
the defendant stated that it was intended
to attack the validity of the patent.
Relics of this reluctance to
enforce a monopoly that was challenged, even
though the alleged
grounds of invalidity were weak, are to be found in the
judgment
of Scrutton L.J. as late as 1924 in Smith v. Grigg, Limited
([1924]
1 K.B. 655); but the elaborate procedure for the
examination of patent
specifications by expert examiners before a
patent is granted, the opportunity
for opposition at that stage
and the provisions for appeal to the Patent Appeal
Tribunal in the
person of a patent judge of the High Court, make the grant
of a
patent nowadays a good prima facie reason, in the true sense
of that
term, for supposing the patent to be valid, and
have rendered obsolete the
former rule of practice as respects
interlocutory injunctions in infringement
actions. In my view the
grant of interlocutory injunctions in actions for
infringement of
patents is governed by the same principles as in other actions.
I
turn to consider what those principles are.
My Lords, when an application
for an interlocutory injunction to restrain
a defendant from doing
acts alleged to be in violation of the plaintiff's legal
right is
made upon contested facts, the decision whether or not to grant
an
interlocutory injunction has to be taken at a time when ex
hypothesi the
existence of the right or the violation of it,
or both, is uncertain and will
remain uncertain until final
judgment is given in the action. It was to mitigate
the risk of
injustice to the plaintiff during the period before that
uncertainty
could be resolved that the practice arose of granting
him relief by way of
interlocutory injunction ; but since the
middle of the nineteenth century this
has been made subject to his
undertaking to pay damages to the defendant
for any loss sustained
by reason of the injunction if it should be held at the
trial that
the plaintiff had not been entitled to restrain the defendant from
doing
what he was threatening to do. The object of the
interlocutory injunction is
to protect the plaintiff against
injury by violation of his right for which he
could not be
adequately compensated in damages recoverable in the action if
the
uncertainty were resolved in his favour at the trial; but the
plaintiff's
need for such protection must be weighed against the
corresponding need of
the defendant to be protected against injury
resulting from his having been
prevented from exercising his own
legal rights for which he could not be
adequately compensated
under the plaintiff's undertaking in damages if the
uncertainty
were resolved in the defendant's favour at the trial. The Court
must
weigh one need against another and determine where " the balance
of
" convenience " lies.
In those cases where the legal
rights of the parties depend upon facts that
are in dispute
between them, the evidence available to the court at the hearing
of
the application for an interlocutory injunction is incomplete. It is
given
on affidavit and has not been tested by oral
cross-examination. The purpose
4
sought to be achieved by giving
to the court discretion to grant such injunctions
would be
stultified if the discretion were clogged by a technical rule
forbidding
its exercise if upon that incomplete untested evidence
the court evaluated the
chances of the plaintiff's ultimate
success in the action at 50 per cent, or less,
but permitting its
exercise if the court evaluated his chances at more than 50
percent.
The notion that it is incumbent
upon the court to undertake what is in effect
a preliminary trial
of the action upon evidential material different from that
upon
which the actual trial will be conducted, is, I think, of
comparatively
recent origin, though it can be supported by
references in earlier cases to the
need to show " a
probability that the plaintiff is entitled to relief " (Preston
v.
Luck 27 Ch.D. 497 per Cotton L.J. at p. 506) or "
a strong prima facie case
" that the right which he
seeks to protect in fact exists " (Smith v. Grigg
Limited
[1924] 1 K.B. 655 per Atkin L.J. at p. 659). These are to be
contrasted
with expressions in other cases indicating a much less
onerous criterion, such
as the need to show that there is "
certainly a case to be tried " (Jones v.
Pacaya
Rubber and Produce Company, Limited [1911] 1 KB 445 per
Buckley
L.J. at p.457) which corresponds more closely with what
judges
generally treated as sufficient to justify their
considering the balance of
convenience upon applications for
interlocutory injunctions, at any rate up
to the time when I
became a member of your Lordships' House.
An attempt had been made to
reconcile these apparently differing
approaches to the exercise of
the discretion by holding that the need to show
a probability or a
strong prima facie case applied only to the establishment
by
the plaintiff of his right, and that the lesser burden of showing an
arguable
case to be tried applied to the alleged violation of that
right by the defendant
(Donmar Productions Ltd. v. Bart
[1967] 1. W.L.R. 740 per Ungoed Thomas
J. at p. 742 Harmon
Pictures Ltd. v. Osborne [1967] 1 W.L.R. 723 per Goff
J.
at p. 738). The suggested distinction between what the plaintiff
must
establish as respects his right and what he must show as
respects its violation
did not long survive. It was rejected by
the Court of Appeal in Hubbard v.
Vosper ([1972] 2 Q.B.
84)—a case in which the plaintiff's entitlement to copy-
right
was undisputed but an injunction was refused despite the apparent
weak-
ness of the suggested defence. The Court, however, expressly
deprecated any
attempt to fetter the discretion of the court by
laying down any rules which
would have the effect of limiting the
flexibility of the remedy as a means of
achieving the objects that
I have indicated above. Nevertheless this authority
was treated by
Graham J. and the Court of Appeal in the instant appeal
as leaving
intact the supposed rule that the court is not entitled to take
any
account of the balance of convenience unless it has first been
satisfied that
if the case went to trial upon no other evidence
than is before the court at the
hearing of the application the
plaintiff would be entitled to judgment for a
permanent injunction
in the same terms as the interlocutory injunction sought.
Your Lordships should in my view
take this opportunity of declaring that
there is no such rule. The
use of such expressions as " a probability ", " a
"
prima facie case ", or " a strong prima facie
case " in the context of the
exercise of a discretionary
power to grant an interlocutory injunction leads to
confusion as
to the object sought to be achieved by this form of temporary
relief.
The court no doubt must be satisfied that the claim is not
frivolous
or vexatious; in other words, that there is a serious
question to be tried.
It is no part of the court's
function at this stage of the litigation to try to
resolve
conflicts of evidence on affidavit as to facts on which the claims
of
either party may ultimately depend nor to decide difficult
questions of law
which call for detailed argument and mature
considerations. These are
matters to be dealt with at the trial.
One of the reasons for the introduction
of the practice of
requiring an undertaking as to damages upon the grant
of an
interlocutory injunction was that " it aided the court in doing
that
" which was its great object, viz. abstaining from
expressing any opinion upon
" the merits of the case until
the hearing " (Wakefield v. Duke of Buccleugh
[1865]
12 L.T. n.s. 628 at 629). So unless the material available to the
court
at the hearing of the application for an interlocutory
injunction fails to
5
disclose that the plaintiff has
any real prospect of succeeding in his claim for
a permanent
injunction at the trial, the court should go on to consider
whether
the balance of convenience lies in favour of granting or
refusing the inter-
locutory relief that is sought.
As to that, the governing
principle is that the court should first consider
whether if the
plaintiff were to succeed at the trial in establishing his right
to
a permanent injunction he would be adequately compensated by an
award
of damages for the loss he would have sustained as a result
of the defendant's
continuing to do what was sought to be enjoined
between the time of the
application and the time of the trial. If
damages in the measure recoverable
at common law would be adequate
remedy and the defendant would be in
a financial position to pay
them, no interlocutory injunction should normally
be granted,
however strong the plaintiff's claim appeared to be at that
stage.
If, on the other hand, damages would not provide an
adequate remedy for
the plaintiff in the event of his succeeding
at the trial, the court should then
consider whether, on the
contrary hypothesis that the defendant were to
succeed at the
trial in establishing his right to do that which was sought to
be
enjoined, he would be adequately compensated under the
plaintiff's under-
taking as to damages for the loss he would have
sustained by being prevented
from doing so between the time of the
application and the time of the trial.
If damages in the measure
recoverable under such an undertaking would be
an adequate remedy
and the plaintiff would be in a financial position to pay
them,
there would be no reason upon this ground to refuse an
interlocutory
injunction.
It is where there is doubt as to
the adequacy of the respective remedies in
damages available to
either party or to both, that the question of balance of
convenience
arises. It would be unwise to attempt even to list all the
various
matters which may need to be taken into consideration in
deciding
where the balance lies, let alone to suggest the relative
weight to be attached
to them. These will vary from case to case.
Where other factors appear to be
evenly balanced it is a counsel of
prudence to take such measures
as are calculated to preserve the status quo.
If the
defendant is enjoined temporarily from doing something that he has
not
done before, the only effect of the interlocutory injunction
in the event of his
succeeding at the trial is to postpone the
date at which he is able to embark
upon a course of action which
he has not previously found it necessary to
undertake ; whereas to
interrupt him in the conduct of an established enter-
prise would
cause much greater inconvenience to him since he would have
to
start again to establish it in the event of his succeeding at the
trial.
Save in the simplest cases, the
decision to grant or to refuse an interlocutory
injunction will
cause to whichever party is unsuccessful on the application
some
disadvantages which his ultimate success at the trial may show he
ought
to have been spared and the disadvantages may be such that
the recovery of
damages to which he would then be entitled either
in the action or under the
plaintiff's undertaking would not be
sufficient to compensate him fully for
all of them. The extent to
which the disadvantages to each party would be
incapable of being
compensated in damages in the event of his succeeding
at the trial
is always a significant factor in assessing where the balance
of
convenience lies; and if the extent of the uncompensatable
disadvantage to
each party would not differ widely, it may not be
improper to take into
account in tipping the balance the relative
strength of each party's case as
revealed by the affidavit
evidence adduced on the hearing of the application.
This, however,
should be done only where it is apparent upon the facts dis-
closed
by evidence as to which there is no credible dispute that the
strength
of one party's case is disproportionate to that of the
other party. The court
is not justified in embarking upon anything
resembling a trial of the action
upon conflicting affidavits in
order to evaluate the strength of either party's
case.
I would reiterate that, in
addition to those to which I have referred, there
may be many
other special factors to be taken into consideration in
the
particular circumstances of individual cases. The instant
appeal affords one
example of this.
6
Returning, therefore, to the
instant appeal, it cannot be doubted that the
affidavit evidence
shows that there are serious questions to be tried. Graham
J. and
the Court of Appeal have already tried the question of
infringement
on such affidavit evidence as was available and have
come to contrary
conclusions. Graham J. has already also tried the
question of invalidity on
these affidavits and has come to the
conclusion that the defendant's grounds
of objection to the patent
are unlikely to succeed, so it was clearly incumbent
upon him and
on the Court of Appeal to consider the balance of convenience.
Graham J. did so and came to the conclusion that the
balance of con-
venience lay in favour of his exercising his
discretion by granting an inter-
locutory injunction. As Patent
Judge he has unrivalled experience of
pharmaceutical patents and
the way in which the pharmaceutical industry
is carried on.
Lacking in this experience, an Appellate Court should be
hesitant
to over-rule his exercise of his discretion, unless they are
satisfied that
he has gone wrong in law.
The factors which he took into consideration and, in my
view properly,
were that Ethicon's sutures XLG were not yet on the
market; so they had no
business which would be brought to a stop
by the injunction ; no factories
would be closed and no
work-people would be thrown out of work. They
held a dominant
position in the United Kingdom market for absorbent surgical
sutures
and adopted an aggressive sales policy. Cyanamid on the other
hand
were in the course of establishing a growing market in PHAE
surgical sutures
which competed with the natural catgut sutures
marketed by Ethicon. If
Ethicon were entitled also to establish
themselves in the market for PHAE
absorbable surgical sutures
until the action is tried, which may not be for
two or three years
yet, and possibly thereafter until the case is finally
disposed of
on appeal, Cyanamid, even though ultimately successful in
proving
infringement, would have lost its chance of continuing to
increase
its share in the total market in absorbent surgical
sutures which the continua-
tion of an uninterrupted monopoly of
PHAE sutures would have gained for
it by the time of the expiry of
the patent in 1980. It is notorious that new
pharmaceutical
products used exclusively by doctors or available only
on
prescription take a long time to become established in the
market, that much
of the benefit of the monopoly granted by the
patent derives from the fact
that the patented product is given
the opportunity of becoming established
and this benefit continues
to be reaped after the patent has expired.
In addition there was a special factor to which Graham
J. attached
importance. This was that, once doctors and patients
had got used to
Ethicon's product XLG in the period prior to the
trial, it might well be
commercially impracticable for Cyanamid to
deprive the public of it by
insisting on a permanent injunction at
the trial, owing to the damaging effect
which this would have upon
its goodwill in this specialised market and
thus upon the sale of
its other pharmaceutical products.
I can see no ground for interfering in the Learned
Judge's assessment of
the balance of convenience or for
interfering with the discretion that he
exercised by granting the
injunction. In view of the fact that there are
serious questions
to be tried upon which the available evidence is
incomplete,
conflicting and untested, to express an opinion now as
to the prospects of
success of either party would only be
embarrassing to the Judge who will
have eventually to try the
case. The likelihood of such embarrassment
provides an additional
reason for not adopting the course that both Graham
J. and the
Court of Appeal thought they were bound to follow, of dealing
with
the existing evidence in detail and giving reasoned assessments of
their
views as to the relative strengths of each party's cases.
I would allow the appeal and restore the order of Graham
J.
Viscount Dilhorne
MY LORDS,
I have had the advantage of
reading the speech of my noble and learned
friend, Lord Diplock. I
agree with it and that this appeal should be
allowed and the Order
of Graham J. restored.
7
Lord
Cross of Chelsea
MY LORDS,
For the reasons given by my
noble and learned friend Lord Diplock in
his speech, which I have
had the advantage of reading in draft, I would allow
this appeal.
Lord Salmon
MY LORDS,
I agree with the opinion of my
noble and learned friend Lord Diplock, and
for the reasons he
gives I would allow the appeal and restore the order of
Graham J.
Lord Edmund-Davies
MY LORDS,
For the reasons given by my
noble and learned friend, Lord Diplock,
I would also allow this
appeal.
317330 Dd 896252 120 1/75 St S
