Supreme Court Rules on Preliminary Injunction Test
The Supreme Court ruled that a preliminary injunction restraining the infringement of a Supplementary Protection Certificate relating to Merck Sharpe & Dohme's Inegy product should have been granted in 2017 and that the availability of damages although a most important factor is not decisive in whether to grant such an injunction.

Background

The Supreme Court of Ireland has found that a preliminary injunction restraining the infringement of a Supplementary Protection Certificate (SPC) should have been granted by the High Court in 2017.  The High Court and the Court of Appeal had refused a preliminary injunction restraining the infringement of the SPC relating to Merck Sharpe & Dohme's Inegy product.

As Merck's SPC had expired before the hearing of the appeal, the Supreme Court noted that the appeal "might appear to be a matter of, at best, academic interest, and then only to the specialist".  However, as the Supreme Court acknowledged, the appeal raised important questions as to the proper approach to preliminary injunctions generally. 

The decision in Merck Sharp & Dohme Corp v Clonmel Healthcare Ltd reasserts the essential flexibility of preliminary injunctions as a remedy.  The Court noted it was necessary to do this periodically as there is a tendency to reduce the case law to a set of rules which then harden over time.  The Supreme Court's decision is a significant milestone in the development of the law on injunctions in Ireland generally, especially in the pharmaceutical sector.

Issues of General Public Importance

The Supreme Court of Ireland hears only cases which raise issues of general public importance. In deciding to hear the appeal, the Supreme Court considered the arguments that preliminary injunction decisions here were out of step with the views of the English courts.  Given the high degree of similarity between the American Cyanamid test in the United Kingdom and the Campus Oil test in Ireland, the Court found that even an arguable divergence gave rise to an issue of law of general public importance.  The majority and dissenting judgments in the Court of Appeal also raised novel issues of general public importance in relation to the preliminary injunction test to be applied in intellectual property cases.

A Refined Preliminary Injunction Test?

Until now, the test in applications for preliminary injunctions in Ireland has been the American Cyanamid test set out in Campus Oil, as affirmed in Okunade.  In short, that test required establishing:

  • a fair case to be tried,
  • whether damages would be an adequate remedy for the plaintiff/defendant at trial; and 
  • that the balance of convenience favoured granting an injunction.

As we reported here, the adequacy (or otherwise) of a remedy in damages has long been a key battleground in such applications.  Where damages were found to be an adequate remedy, preliminary injunctions were typically refused and no consideration of the balance of convenience was undertaken.  In patent cases and SPC cases, the trend has been towards refusal of preliminary injunctions.  Rights-holders found to have a remedy in damages available at the full trial of the claim have typically been refused preliminary injunctions, even where damages would be difficult to calculate.  

Now, the Supreme Court has ruled that "the preferable approach is to consider the adequacy of damages as part of the balance of convenience" assessment rather than a hurdle prior to that assessment.  The adequacy of damages will continue to be "the most important component" of the balancing exercise.  However, availability of damages will not be decisive, particularly where difficulty in calculation makes it likely that any damages awarded will not be a precise and perfect remedy.

Instead, other factors may be considered and weighed in the balance by a court in considering how matters are to be held most fairly pending a trial, and in recognising the possibility that there may be no trial.  These factors may include presumptive validity of intellectual property rights, a preference for preserving the status quo ante, and whether the alleged infringer could have "cleared the way" by way of invalidity proceedings.  The Court emphasised that failing to clear the way would not be decisive and recognised that clearing the way may pose some problems for a generic manufacturer.  It was nonetheless a factor to be weighed in the balancing exercise.

Finally, the Supreme Court found that in preliminary injunction applications a court could consider whether the merits of the claim were likely to succeed where the strengths in the parties' cases were apparent.  For example, the Court observed that determinations of invalidity of the disputed intellectual property right in other European countries or other comparable jurisdictions might weigh against granting an injunction against a generic manufacturer.

What now?

The Supreme Court found that the parties' arguments on the adequacy of damages as a remedy were finely balanced.  Ultimately it placed weight on other factors which favoured the grant of an injunction in Merck's favour, notably that Merck's SPC was valid pending the outcome of the invalidity hearing.  As Merck's SPC had expired before the hearing of the appeal, an injunction against Clonmel Healthcare will not be granted and the appeal will not dispose of the substantive case.  A full hearing on the merits concluded separately in the Commercial Court today and the decision is awaited.

Contributed by: Erika O'Donnell and John Sugrue

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