This intriguing question is referred to the Court of Justice of the European Union (CJEU), which is to consider whether a Member State may exclude damages to the party aggrieved by an unjustified preliminary injunction (PI), if the party has failed to “clear its way” before entering the market (i.e. by starting a revocation or non-infringement action against the patent in suit before launching the alleged infringing product).
If a granted PI was unjustified, either because it is subsequently found that there has been no infringement or the patent in suit is revoked, the national courts must have authority to order the applicant of the PI, upon the request of the defendant, to provide the defendant with appropriate compensation for any loss caused by the unjustified PI. This principle of “appropriate compensation” is laid down in Article 9(7) of the Enforcement Directive.
In 2011, patentee Bayer Pharma AG obtained a PI against Richter Gedeon’s and Exeltis’s marketing and sale in Hungary of a contraceptive medicinal product. The patent in suit, however, was subsequently revoked and the PI was lifted.
On this basis, Richter Gedeon and Exeltis claimed damages to be paid by Bayer Pharma AG for the loss suffered due to the unjustified PI. Bayer, on the other hand, argued that since Richter Gedeon and Exeltis had launched their products at risk, i.e. without first clearing the way by requesting that the patent in suit be revoked, Bayer Pharma AG had no obligation to pay damages, even though the PI was wrongfully issued.
The referred questions
The referring court, the Metropolitan Court of Budapest, referred two questions to the CJEU under the Enforcement Directive.
Firstly, the CJEU must consider whether Article 9(7) of the Enforcement Directive must be interpreted to mean that Member States must establish the substantive rules of law on the liability of parties and the amount and method of compensation, or whether the Enforcement Directive provides for the conditions and rules for the calculation of such compensation?
If the answer to the first question is in the affirmative, the CJEU must consider whether a Member State may exclude any damages to a party aggrieved by an unjustified PI, if such party has not acted in conformity with what would generally be expected in the circumstances in question?
Advocate General Pitruzzella’s opinion
On 11 April 2019, AG Pitruzzella gave his opinion in the case (no. C-688/17). AG Pitruzzella suggests answering the first question in the affirmative, meaning that the Enforcement Directive only sets forth a principle of “appropriate compensation” in case of unjustified PIs. The specific conditions and method for the calculation of the compensation must thus be decided by the Member States. AG Pitruzzella, however, suggests that the national rules must ensure that the aggrieved party may in fact obtain compensation.
The second question relates to whether it is acceptable under the Enforcement Directive to exclude any kind of compensation, should the alleged infringer refrain from “clearing its way” before launching the alleged infringing product. AG Pitruzzella is of the opinion that this question should be answered in the negative, as such a strict rule would not be compatible with the Enforcement Directive.
AG Pitruzzella notes that the Enforcement Directive intends to strike a balance between two objectives, namely the protection of the interests of the right holders and the protection of legitimate trade against unjustified obstacles. However, AG Pitruzzella concludes that neither of these objectives would be served, if the defendant could simply point to the formal existence of its right at the time the PI was granted to avoid liability for an unjustified PI.
AG Pitruzzella, moreover, emphasizes that holding that the alleged infringer must either “clear the way” or lose its claim for adequate compensation for an unjustified PI, would substantially lower the risk of using PIs and thus encourage abusive PI requests.
In Denmark, the principle of “appropriate compensation” is secured in section 428 in the Danish Administration of Justice Act (retsplejeloven), which stipulates that anyone who has obtained a PI based on a right which subsequently proves not to be valid must pay damages for any loss the other party has suffered due to the unjustified PI.
It will be interesting to see whether the CJEU will follow AG Pitruzzella’s opinion, especially whether “launch at risk” may be considered to constitute some form of “contributory negligence” and thus be a factor to lower or deny compensation to the aggrieved.
On this question regarding a lowering the compensation, AG Pitruzzella was more open, stating that “launch at risk” may be taken into account by the national courts, together with other relevant circumstances - such as the characteristics of the patent and the market - when determining the compensation to be awarded to the defendant, which, in accordance with Article 3 of the Enforcement Directive, must be effective, fair and equitable.
We expect that CJEU will issue its decision within a few months. The Bech-Bruun Life Sciences team will monitor these developments closely and provide an update once the CJEU issues its decision in the case.