The Supreme Court decision in Merck Sharp & Dohme Corp v Clonmel Healthcare Ltd  IESC 65 is an important judgment which takes a fresh look at the circumstances in which the Irish Courts should grant an interlocutory injunction. It has a particular resonance in the field of patents and Supplementary Protection Certificates (“SPCs”), where a series of recent judgments, including the judgment under appeal had taken a quite restrictive approach (see our briefing note on those earlier judgments here).
In allowing the appeal, the Court considered interlocutory injunctions from a first principles perspective, reasserted the essential flexibility of the remedy and cautioned that the decision in American Cyanamid (applied in Ireland in Campus Oil) should not be approached as though it was laying down mechanical rules to be applied in future cases. In applying the law, the Court adopted a more nuanced approach to the issue of adequacy of damages than had been evident in recent judgments and gave valuable guidance as to how the balance of justice should be weighed up in cases such as this, where an interlocutory injunction is sought to prevent a patent or SPC from being infringed.
Decision under appeal
Merck’s appeal was in respect of a decision of the Court of Appeal, upholding a judgment of the High Court, refusing an interlocutory injunction to restrain Clonmel from infringing an SPC held by Merck by launching a generic version of Merck’s cholesterol-reducing medicine Inegy. The stability of the market and fact that Merck’s SPC had only nine months to run contributed to the majority’s finding in the Court of Appeal that damages would be an adequate remedy for Merck. In contrast, Clonmel’s loss of “first mover advantage”, if an injunction were to be incorrectly granted, could not have been compensated by damages. A dissenting judgment in the Court of Appeal focused on an SPC being a constitutionally protected property right.
In allowing the appeal, the Supreme Court emphasised that an interlocutory injunction has always been a flexible remedy. Reasserting the flexibility of the remedy was in fact the theme of American Cyanamid and that judgment should not be approached as though it were the laying down of strict mechanical rules. The approach applied in American Cyanamid remains a valuable guide to help avoid injustice though, if not applied with a degree of flexibility and sensitivity, can have a distorting effect.
Adequacy of damages
As a preliminary point, the Court first found that the issue of adequacy of damages forms part of the consideration of the balance of convenience – it is not a separate and antecedent hurdle that must be overcome. Adequacy of damages for both parties – i.e. who would suffer greater irremediable harm in the event that an interlocutory injunction is granted or refused – will often, however, be the most important factor in the balancing exercise.
In relation to assessing adequacy of damages, the Court adopted a less restrictive approach than that evident, for instance, in the recent patent and SPC injunction cases in Ireland. The Court noted the observation by Lord Diplock in American Cyanamid that, “save in the simplest cases”, the decision to grant or refuse an interlocutory injunction will cause the unsuccessful party some disadvantages that could not be fully compensated by damages.
The Court held that the apparently high bar set by the Supreme Court in Curust1 must be read in light of its facts and impossibility of assessing damages is not a threshold that must be met. Difficulty of calculation of damages may be relevant in order to ensure that justice is done: “The fact that it is in theory possible to gather every feather does not mean that it is not more convenient to stop the pillow being punctured in the first place.” Damages, the court noted, “are not a perfect remedy, and cannot be a complete answer to an application for an injunction whether permanent or interlocutory”.
On the facts, while the Court noted that monetary damages would go a considerable distance to compensate both parties, both involved a degree of hypothesising and an unavoidably speculative calculation. The matter was further complicated by the possibility of entry of other generic producers. The Court held that there was an essential symmetry of the parties’ interests and that “in neither case will damages be a fully adequate remedy, and, furthermore, the likelihood of some irreparable harm being occasioned to the successful party is also equally balanced between the parties.”
Other factors in the balance of convenience
The Court addressed a number of other factors that are important in the assessment of the balance of convenience. Most notably, the Court placed significant emphasis on the fact that Merck in this case held an SPC, a property right “conferred by a process of law which is presumptively valid.”
The Court also considered that weight should be attributed to Clonmel’s failure to “clear the path”, while accepting that such failure was not itself dispositive of the issue and recognising that to do so could pose problems for a generic in that they would be clearing the path for everyone.
The strength of the parties’ underlying case was also something that could be relevant in the weighing up of the balance of convenience, and Hogan J in the Court of Appeal was correct to form a tentative view of the merits. The Court held that “if it was apparent that Clonmel’s case for invalidity was strong, and/or if there had been successive determinations in Clonmel’s favour of a similar challenge in other jurisdictions, then that might weigh against the grant of an injunction”. On the facts, however, it was sufficient to say that Clonmel’s case had not been shown to have that degree of strength which would outweigh the factors in favour of the grant of injunction. It remains to be seen, therefore, in what circumstances a demonstrably strong case on invalidity will outweigh the existence of a presumptively valid patent or SPC where a generic has failed to clear the path, and to what extent the Courts will be prepared to engage with substantive legal argument at the interlocutory stage.
Owners of Irish patents and SPCs will welcome this rare judgment from the Supreme Court on an application for an interlocutory injunction to restrain infringement of patent/SPC rights, with its re-statement of the applicable test, emphasis on the weight to be attributed to presumptively valid patents and SPCs and its finding that Merck ought to have been granted an interlocutory injunction in this case.