Background

Neurim Pharmaceuticals (1991) Limited ("Neurim") and Flynn Pharma Limited ("Flynn") issued UK infringement proceedings against Generics (UK) Limited and Viatris UK Healthcare Limited ("Mylan") in respect of European Patent (UK) No. 3 103 443 ("EP443"), on 30 June 2021. EP443 had been granted on the same date.

EP443 is a divisional of Neurim's second medical use patent EP (UK) No. 1 441 702 ("EP702"), which (as proposed to be unconditionally amended) claimed the use of a prolonged release formulation of melatonin in 2mg dose form. The relevant product covered by EP702 was marketed by Neurim's licensee, Flynn, under the trade mark 'Circadin' in the UK. EP702 had been found to be invalid by the EPO Opposition Division on 20 November 2019; while appealing this decision, Neurim and Flynn had brought UK infringement proceedings against Mylan and sought an interim injunction. The request for interim relief was refused by the High Court and Court of Appeal and Mylan subsequently launched a generic version of Circadin in the UK in late September 2020.

EP702 was subsequently found valid and infringed by the UK High Court by a decision of Mr Justice Marcus Smith of 4 December 2020. Shortly thereafter, on 18 December 2020, the EPO Board of Appeal indicated at an oral hearing that EP702 was invalid for insufficiency. Neurim withdrew its appeal and EP702 was revoked.

In the UK proceedings concerning EP443, Neurim and Flynn sought to unconditionally amend the patent to make the claims "patentably indistinct" from the claims of EP702, and contended that Mylan was estopped from challenging the validity of EP443 as a result of the earlier UK decision which upheld EP702 as valid and infringed. Mylan contended that Neurim's conduct in amending EP443 was an abuse of process. The issue estoppel and abuse arguments were heard as a preliminary issue by Meade J in December 2021; both sets of arguments failed and Meade J ordered that the trial on EP443 would be listed before Marcus Smith J (limited to plausibility/insufficiency issues) and considered on the basis of the expert evidence previously submitted in relation to EP702.

Marcus Smith J found (on paper) that EP443 was valid and infringed, and affirmed this finding following an oral hearing requested by Mylan. In consequence of his judgment, Marcus Smith J granted Neurim and Flynn an injunction to restrain Mylan from infringing EP443 (to take effect from 4pm on 10 March 2022), and refused Mylan's application for a stay of the injunction pending the determination of permission to appeal.

Mylan subsequently sought the following orders from the Court of Appeal: (1) permission to appeal the decision concerning EP443; (2) expedition of the appeal; and (3) a stay of the injunction pending appeal.

Decision

The Court of Appeal granted permission to appeal EP443, expedition of the appeal and a stay of the injunction pending the appeal. Giving the leading judgment of the Court of Appeal, Arnold LJ explained that Mylan's Grounds of Appeal had a real prospect of success and that expedition was appropriate in light of the fact that EP443 was due to expire on 12 August 2022.

In respect of the request for a stay pending appeal, the Court considered the principles set out by Buckley LJ in Minnesota Mining and Manufacturing Co v Johnson & Johnson Ltd, as discussed by Floyd LJ in Novartis AG v Hospira UK Ltd, by reference to three main issues:

1. If a stay of the injunction were granted, would Neurim and Flynn be adequately compensated by an award of damages in the event Mylan's appeal was dismissed? Arnold LJ considered that the Claimants would be adequately compensated by an award of damages, having regard to the earlier decision of Marcus Smith J and the Court of Appeal in refusing an injunction and noting that there had been "no relevant change of circumstances since then" and that the reasoning of those earlier judgments "holds good in the present context".
    
2. If the appeal were dismissed, could Mylan be adequately compensated by a damages pursuant to a cross-undertaking offered by Neurim and Flynn? Arnold LJ found that Mylan would not be adequately compensated by damages paid by Neurim and Flynn pursuant to a cross-undertaking, because Mylan's damage would be difficult to quantify in light of the loss of the advantage of "first refusal of future contracts to supply pharmacies" and the difficulties in having to re-establish their foothold in the market after having been forcibly removed from it.
    
3. The prudency of observing the status quo. Arnold LJ concluded that even if the Court of Appeal considered that both sides were equally likely to suffer unquantifiable damage, it would be prudent to preserve the status quo pending the appeal.

Birss LJ agreed with Arnold LJ, save that, in respect of the reasoning on the stay application, he considered that the proper emphasis for the decision should be on preserving the status quo because there was a material risk that damages would be an inadequate remedy for both parties. He explained that "[i]n mathematical terms a numerical result can always be found but the error bars will be large. In my judgment the decisive factor here, given that the appeal has been expedited and will be resolved before the patent expires, is the preservation of the status quo. That status quo is that Mylan is on the market and has been since September 2020. The uncertainties do not justify disturbing that state of affairs." Newey LJ agreed with both Arnold and Birss LJJ.

Comment

The Court of Appeal's decision concerning the request for a stay of injunction relief demonstrates the importance of preserving the status quo between first instance and appeal, particularly in circumstances where the gap between first instance and appeal proceedings is likely to be short (in this case, two to three months). Birss LJ's comment that "there is a material risk that damages will be an inadequate remedy for each party in the relevant circumstances" is likely to be of particular interest to patentees seeking interim injunctive relief, especially having regard to the decisions from the High Court and Court of Appeal earlier in this litigation which refused Neurim's application for an interim injunction on the basis that damages were considered to be an adequate remedy (see [2020] EWHC 1362 (Pat) and [2020 EWCA] Civ 793).

Authored by Jemma Trainor and Katie Barton.