Teva v. Merck – II: Division bench shoots down Teva, hints at patent linkage

In Part I, we went through the history of the litigation in the Delhi High Court between Teva and Merck over the former’s alleged infringement of the latter’s Sitagliptin patent (IN209816). In an order dated 30 May 2016, a division bench of Pradeep Nandrajog and Mukta Gupta, JJ. declined to interfere with the single judge’s listing orders, and directed that the applications under Order 39 Rules 1 and 4 be heard on the next date given by the single judge (8 July 2016).

Teva’s primary claim was that it was manufacturing the Sitagliptin API for R&D purposes and exporting small quantities to obtain regulatory approval in various countries, as opposed to commercial exports. Since such activity was squarely covered by Section 107A of the Patents Act, Teva sought the vacation of the interim injunction.

As rightly noted by the division bench in its order, this seems to be a fairly simple question of fact, on which a finding could have been returned by the single judge from a bare perusal of the export documentation presented by the parties. In the words of the bench, such a finding could be returned after a “crisp hearing not lasting beyond 15-20 minutes”.

Despite explicitly appreciating the statutory mandate in Order 39 Rule 3A to dispose of ex parte injunctions within 30 days, the division bench goes on to craft an elaborate defence of the single judge’s listing order.

Two factors appear to inform the division bench’s decision not to interfere and expedite proceedings: an apparent lack of urgency on Teva’s part, and the fact that the Sitagliptin patent would only expire in 2022, meaning that Teva could still obtain regulatory approval well before the expiry if the infringement suit was decided by the end of the year.

I argue that the latter consideration is wholly irrelevant, and the division bench has erred in even entertaining an argument on that front (let alone base its decision on it).

Lackadaisical Lawyering?

The division bench has taken note of two facts that seem to betray a laidback approach from Teva: first, its failure to file a written statement in the original infringement suit; and second, its consent to the adjournment order dated 7 April 2016.

I fail to see how the non-filing of a written statement would have any bearing on the vacation of the ex parte injunction, especially when it’s abundantly clear that Teva has tried every trick in the book to challenge the injunction in front of a judge within reasonable time. Not only did its counsel approach the court under Order 39 Rule 4 within a month of the ex parte, it also attempted to challenge the injunction order through a review petition subsequently. Given that it moved heaven and earth in vain to have the injunction vacated, it is clear that Teva’s conduct demonstrated the urgency with which it treated the matter. Whether or not it responded to Merck’s plaint on merits should be completely immaterial, since the ex parte would have been an immediate threat to its operations, to be dealt with on top priority. Either way, Prashant tells me that a written statement would be necessary for the judge to ascertain the defendant’s position on the issues at hand. Given that the O39R4 IA seems to have set out Teva’s stance (eg. the Section 107A defence) in a fair amount of detail, the non-filing of a written statement seems to be all the more redundant.

With respect to its recorded consent for an adjournment, it must be said that the division bench is on much stronger footing in its decision to brush aside arguments of fact and take the single judge’s order at face value. It’s unclear whether a communication gap or similar confusion resulted in Teva’s counsel consenting to the July date, but a subsequent attempt to assail a date arrived at with its recorded consent seems to be a stillborn argument from the very beginning.

Resurrecting the ghost of patent linkages past?

If the division bench had merely thrown out Teva’s appeal on the ground that it was self-contradictory, everything would be hunky-dory. However, the bench seems to go overboard when it dismisses Teva’s plea for expedited disposal on the ground that the suit patent only expires in 2022, leaving the defendant enough time to obtain regulatory approval after the infringement suit is decided at its natural pace.

At the very outset, such reasoning is problematic in its outright dismissal of a litigant’s right to a speedy trial. Worse still, it flies in the face of Supreme Court rulings which mandate that IP cases, by their very nature, must be disposed of as soon as possible.

Most worryingly, there are eerie echoes of patent linkage in the reasoning followed by the bench: “why must we speed things up for you”, it asks Teva, “when you can anyway only launch the product in 2022?” The short answer to this question is that generic manufacturers have a right to produce and experiment with patented drugs regardless of whether such research occurs “just in time” for patent expiry or not. Simply put, it is not the Delhi High Court’s business to interfere if Teva’s marketing strategy calls for early regulatory approval in foreign markets – it would be well within its rights in doing so, and cannot be penalised for an entirely legal business decision.

Bayer attempted to wrestle a patent linkage regime into place in its litigation against Cipla, and the Delhi HC (through Bhat, J.) emphatically rejected its argument on that occasion, in a ruling that was later affirmed by a division bench and allowed to stand by the Supreme Court. In dismissing Bayer’s argument and holding that the Drug Controller General of India was under no obligation to consider the patent status of a drug for the purpose of granting marketing approval, the Delhi HC specifically pointed to the importance of Section 107A in accelerating generic entry, and tied this to the public interest in ensuring that generic marketing begins on the day the patent expires.

Six years on from Bayer v. Cipla, the Delhi HC appears to be dangerously close to letting a more insidious form of patent linkage in through the back door, this time through the garb of conditioning the speedy disposal of injunction applications on the remaining lifespan of the suit patent.

My point here is not that the Delhi HC has made it impossible for Teva to obtain timely regulatory approval in foreign jurisdictions, or that Teva was a fit case for the division bench to intervene and accelerate trial. Teva’s recorded consent to the July date ensures that it is far from the perfect petitioner, and the Delhi HC would have been fully justified in throwing its case out on this ground. However, in basing its reasoning upon the wholly irrelevant consideration that the suit patent only expires in 2022, the bench has handed patentees a new argumentative tool for no good reason. While the ruling may have been a product of the specific facts at hand (delayed disposal would have a negligible chance of materially affecting Teva’s market entry), it unnecessarily opens up an avenue for plaintiffs to justify lengthy delays during the operation of interim injunctions.