About this time last year, we began our examination of the systemic dilution of the standards required for patent infringement plaintiffs to obtain interim injunctions (often ex parte) from Indian courts, and the resultant exploitation of this dilution by innovator attorneys to evolve a litigation strategy premised on the near-indefinite prolongation of interim relief for their clients. (Regular readers can skip the next couple of paragraphs!)
Advocates representing patentees have pointed out that interim relief is of vital importance in cases where the infringer is able to capture the innovator’s market share by heavily undercutting the monopoly price, forcing the patentee to slash prices in response. I’ve dealt with this argument in the pharma patent context here, but the response is symptomatic of a broader helplessness that innovator attorneys face when attempting to protect their clients’ interests: the perception that by the time the infringement suit is decreed, the infringer has already made a tidy profit at the expense of the innovator, and no amount of compensation can make good the harm suffered by the patentee.
One solution to this problem proffered by Prof. Basheer was to implement the Supreme Court’s dictum in Bajaj v. TVS and expeditiously decide infringement cases directly on merits without entertaining arguments on preliminary injunctions. The obvious counter to this is that in industries that are regulated more loosely than pharma, the lack of timely interim relief may allow fly-by-night operators to make a quick buck, close up shop and hit the road by the time the decree arrives, leaving the plaintiff high and dry.
While the issue as a whole may not lend itself to easy resolution, I believe that there is a credible case to be made for adopting the Bajaj dictum as gospel, at least in the pharmaceutical innovation context. Although the state of our drug regulators is far from perfect, the existence of a regulatory framework that must be complied with (at least on paper) for conducting business would (in my opinion) suffice as a safeguard against unscrupulous infringers who will be unable to discharge decrees.
Another issue that needs to be addressed is the fact that patentees are rarely challenged when they attempt to delay proceedings – as we’ve documented before, there are cases where defendants/generics have (inexplicably) been all too willing to play along.
Teva v. Merck
In Teva API India v. Merck Sharp & Dohme [FAO (OS) (Comm) 34/2016 from CS (Comm) 90/2016], Merck sued Teva for infringement of the Sitagliptin patent (IN209816). On 10 February 2016, through IA 1998/2016, Merck prayed for and obtained an ex parte ad interim injunction restraining Teva from manufacturing the Sitagliptin API. As has been the case in the cases we’ve examined previously, the text of the order (authored by Vipin Sanghi, J.) is, at best, incompletely reasoned. Order 39 of the Code of Civil Procedure (which deals with interim injunctions) as well as a considerable body of precedent require that three factors need to be fulfilled for the grant of an interim injunction: the plaintiff must make out a prima facie case, she must show that irreparable harm will accrue to her if the injunction does not issue, and she must show that the balance of convenience lies in favour of the grant of an injunction.
As has been the case in previous instances, the Teva order (dated 10 February 2016) is robust when it comes to analysing the prima facie case of patent validity and infringement, citing Merck v. Glenmark in support of the former, and returning a preliminary finding of fact on the latter. With respect to irreparable harm and the balance of convenience, however, Justice Sanghi’s order leaves much to be desired. The order simply ignores these factors, jumping directly from a prima facie case to the grant of an injunction. We have no way of knowing whether this omission means that irreparable harm and the balance of convenience were never argued before the judge, or if the judge (having been orally satisfied of the existence of these factors) elected not to record his findings on these points. In either case, this represents a grave omission, one that cannot find justification merely because it is merely reflective of a larger trend in which ex parte injunction orders are issued without adequate reasoning.
The first round of the Teva litigation is exemplary of yet another problematic trend in Indian patent litigation: the suit is titled Merck Sharp & Dohme Corp. & Anr. v. Mr. Sunil Sharma & Ors. Mr. Sunil Sharma, from a cursory search, appears to be a General Manager and Company Secretary for Teva API India Ltd. The non-impleadment of the company as the first defendant is consistent with earlier cases, and appears to be a strategy aimed at making it harder for the defendant to keep track of litigation and enter appearance in court before notice is served on them.
Teva filed IA 3675/2016 under Order 39 Rule 4 of the CPC (“the O39R4 IA”), seeking the vacation of the interim injunction. In the IA, Teva pleaded that it was protected by Section 107A of the Patents Act, since it was merely manufacturing the Sitagliptin API for regulatory approval around the world, and not exporting it commercially. On 18 March 2016 (about five weeks after the injunction issued), notice was issued to and accepted by Merck in the O39R4 IA, and the matter was listed on 7 April 2016. The order dated 7 April records that proceedings were adjourned to 8 July 2016 “at joint request”.
Teva then tried a new approach, filing a Review Application (RA 201/2016) against the original injunction order, but upon notice being issued, this, too was listed for 8 July 2016. It’s at this point that Teva filed its FAO. Teva appealed to the division bench against the single judge’s delayed listing of the O39R4 IA and its Review Application, coupled with his failure to decide the fate of the ex parte injunction within 30 days (as mandated by Order 39 Rule 3A).
While I think it’s excellent that Teva and its counsel have challenged what seems to be industry practice among innovators and their attorneys, Nandrajog and Gupta, JJ. did not view the appeal favourably, and declined to interfere with the single judge’s orders in the matter. Over the next post, I’ll take you through the division bench’s reasoning, and the possible implications of this order on pharma patent litigation in India.