In an important decision rendered on October 8, 2015, the Honourable Judge, Prof. Ofer Grosskopf ("the Judge"), accepted a motion filed by a local generic company, Unipharm Ltd. ("Unipharm") demanding that Sanofi furnish accounts, within the framework of a suit instituted by Unipharm against Sanofi, claiming Sanofi's profits from marketing its drug Plavix® (Clopidogrel Bisulfate) in Israel. Unipharm argued that Sanofi had misled the Commissioner of Patents and had also breached the antitrust laws. In particular, Unipharm’s main assertions were that, by filing a misleading patent application, Sanofi had unjustly abused its monopolistic status and had also acted in bad faith, thereby delaying Unipharm's launch of its generic drug.
Sanofi was the owner of an Israeli patent which claimed Clopidogrel in all its salt forms and all possible polymorphs. The patent expired on February 3, 2008 ("the Basic Patent"). At that time, only one polymorph of Clopidogrel Bisulfate was known ("Form 1").
In the second half of 1997, and close to completion of the procedures for obtaining marketing approval for Sanofi's drug, a new crystalline polymorph of Clopidogrel Solfate, with improved qualities – Form 2 – was accidentally discovered, by Sanofi ("Form 2"). On October 11, 2000, Sanofi filed another patent application in Israel, IL 139790, claiming Form 2 ("the Patent Application"), thus deterring potential competitors from using the more advantageous polymorph
The Patent Application was subject to two opposition proceedings filed by Unipharm and Teva Pharmaceutical Industries Ltd ("Teva"). On June 6, 2010, in the midst of the opposition proceedings, Sanofi announced its abandonment of the Patent Application due to commercial reasons.
Unipharm asserted that it delayed the launch of its generic drug due to the risk of retroactive compensation had the Patent Application been accepted. Unipharm also argued that Sanofi is liable for the delay in Unipharm's marketing of the generic drug and, therefore, Unipharm is entitled to Sanofi's profits during the period between the expiry of the Basic Patent and abandonment of the Patent Application ("the Period of Delay".(
The Judge analysed the factual and legal disputes between the parties in view of four main questions:
a. Was the Patent Application "weak", namely, without any real chance of success?
b. At the time of filing the Patent Application, was Sanofi aware of the alleged weakness of its Patent Application?
c. Did Sanofi mislead and conceal essential information from the Commissioner of Patents?
d. Did the Patent Application create a real obstacle for Unipharm to launch its generic drug following the expiry of the Basic Patent?
With regard to questions (a) and (b), the Judge did not accept Unipharm's position and noted that the question of what amounts to a "weak patent application" is complicated. In this context the court noted, inter alia, that an indicator of a patent’s strength may be the success or failure in registering corresponding patent applications in other territories. However, the court held that in the case at hand there was insufficient factual evidence to conclude that the Patent Application was weak, let alone, that Sanofi knew or could expect, at the time of filing the Patent Application, that ultimately it would not be allowed.
With regard to question (c) – the Judge accepted Unipharm’s argument that Sanofi's acts were misleading and that Sanofi had withheld essential information from the Commissioner of Patents at the time of filing the Patent Application. Specifically, the Judge ruled that Sanofi took a conscious decision to include a misleading example in the patent specification, and to rely on a priority document that Sanofi had known at the time of filing the Patent Application was incorrect and invalid (the judge also noted Sanofi’s failure to divulge to the Commissioner of Patents the circumstances involving the discovery of Form 2). Such actions support Unipharm's argument that Sanofi misled and knowingly withheld essential information from the Commissioner of Patents.
The Judge further commented that Sanofi is presumed to have obtained advice from professional legal counsel, and the fact that similar misleading actions were taken by it in other territories, serves as an indicator of Sanofi's intent. In this context the Judge ruled that patent applicants cannot withhold essential information from the Commissioner of Patents. Said patent applicants' liability is not limited to an intentional active or passive misleading act, but that the misleading act may also result from negligence. The Judge further ruled that patent applicants' liability extends also to information which goes beyond the formal discovery obligations to submit relevant prior art known to it or cited against it, as is required under section 18 of the Israeli Patents Law, 1967 ("the Patents Law"). Furthermore, even where at a later stage the examiner or the Commissioner of Patents obtains the full and accurate information, and does not rule on the basis of the misleading information, said information would not alleviate the full damage already caused by a misleading application.
Having ruled that Sanofi knowingly withheld information from the Commissioner of Patents, the Judge concluded that the very existence of the Patent Application was the main reason for Unipharm's delay in entering the relevant market and for increasing its costs of development.
Therefore, the Judge turned to examine Unipharm's entitlement to compensation and the scope thereof. The Judge examined several possible legal grounds for Unipharm's entitlement to compensation - including, the Patents Law and the Israeli Antitrust Law, 1988. While both laws allow for a broad range of measures to be taken against an applicant’s misconduct (as Sanofi did), none of such measures can serve as a basis for Unipharm's claim for Sanofi's profits during the Period of Delay. The basis for Unipharm's legal standing was therefore found to exist in the Unjust Enrichment law.
In reliance on the Unjust Enrichment law, the Judge implemented rules of competition, and emphasized the importance of the public interest in encouraging generic companies to file suits of this nature. According to the Judge, without the prospect and ability of generic companies to seek redress in the form of profits of the innovator, as opposed to seeking mere compensation for its own damages, there is insufficient incentive for generic companies to initiate legal action in similar cases.
Furthermore, without compensation entitling the generic manufacturer to the full amount of the brand manufacturer's profits, the wrongdoer stands to profit from his misconduct, since compensating competitors for mere damages would likely fall short of the monopolist’s profits.
According to the Judge, entitling generic companies to compensation in the form of the brand manufacturer’s profits constitutes an important incentive to battle the phenomenon known as "Evergreening".
To conclude - the Judge ruled in favour of Unipharm, stating that it is entitled to Sanofi's profits earned during the Period of Delay.
Comment: the dangers in misleading and concealing essential information in patent applications and the right to compensation where such misconduct delays competition.
This case demonstrates the crucial role of providing full and truthful information when filing a patent application, as well as during the prosecution and opposition procedures. In the past, actions such as those taken by Sanofi would have theoretically resulted, at most, in loss of patent rights. Moreover, compensation to generic companies would have probably been limited to losses incurred by the generic companies. It is now clear that applying for a patent, while misleading and withholding information from the Commissioner of Patents, in the patent application and thereafter, may result in significant liability being attributed to the innovative manufacturer for the unjustified deterrence of potential competitors and could lead to a need to compensate potential competitors for the full amount of the innovative manufacturer's profits during the deterrence period. This decision should serve as guidance for patent applicants, to accurately produce all appropriate and relevant information when filing the patent application, as well as when required in any other proceedings.