CJEU confirms strict liability standard for losses due to PI

The CJEU has ruled that Article 9 (7) of Directive 2004/48 EC does not preclude national mechanisms for compensation for any injury caused by provisional measures.

This directive states, “Where the provisional measures are revoked or where they lapse due to any act or omission by the applicant, or where it is subsequently found that there has been no infringement or threat of infringement of an intellectual property right, the judicial authorities shall have the authority to order the applicant, upon request of the defendant, to provide the defendant appropriate compensation for any injury caused by those measures”.

The CJEU has now confirmed that Finnish law, which demands a strict liability principle in cases where a court overturns a PI, complies with the EU directive. Doubts as to its compliance arose from the interpretation of the strict liability standard in another CJEU case of 2019, C-688/17 (Bayer Pharma vs. Gedeon Richter). In view of this, the Finnish Market Court (markkinaoikeus) submitted the question to the CJEU in a damages dispute between Gilead and Mylan (now Viatris).

Last September, the Advocate General had indeed found that the strict liability standard did not comply with Article 9 (7) of the Directive 2004/48/EC as interpreted in the judgement from 2019. Nevertheless, the CJEU did not follow this argumentation and ruled that a strict liability standard complies with the EU directive.

However, according to the recent decision, the national court may adjust the amount of damages by taking into account the circumstances of the case. This includes, for example, if the defendant played a part in the occurence of the injury (case ID: C‑473/22).

Blockbuster under attack

The ruling is based on a dispute in Finland between Gilead and Mylan over the SPC protecting HIV drug Truvada. For a long time, Truvada was one of Gilead’s most economically important products. The originator fought hard across Europe for its property rights. The HIV drug combines active ingredients tenofovirdisoproxil and emtricitabine. The basic patent EP 0 915 894 B1 expired in July 2017 and covers only tenofovirdisoproxil. The SPC was valid until August 2020 and covered the combination of both ingredients.

Several generics companies launched nullity suits against the SPC for Truvada in different countries. This is because the 1997 application for the basic patent made no explicit reference to emtricitabine as an effective treatment for HIV. Courts in several countries, including the UK, France and  Germany found the SPC invalid.

Two CJEU judgments in one case

Another ruling by the CJEU, also based on the Truvada dispute, preceded the case.

In 2017, the UK High Court referred a question to the CJEU concerning whether an SPC may be granted for a combination of active ingredients, even if the basic patent only explicitly mentions one active ingredient. The UK judges hoped that clarification from the European court would help them to interpret Article 3a of EU Regulation 469/2009 on SPCs for medicinal products.

Then, in 2018, the CJEU ruled that a preparation consisting of several active ingredients is protected if the claims of the basic patent relate to the combination of the active ingredients (case ID: C‑121/17). This applies even if the active ingredients are not expressly mentioned in the basic patent. A person skilled in the art must be able to identify both the combination of active substances and each individual active substance.

Subsequently, the UK High Court reversed the SPC in the UK, a decision which the Court of Appeal also upheld at the second instance. The UK Supreme Court dismissed an appeal by Gilead against the nullity decision in August 2020. Similar decisions by courts in several other European countries followed suit.

Finnish referral

One of these was the Finnish Market Court in Helsinki, which had referred the current question.

The SPC based on EP 894 was granted in Finland in 2009, covering “Tenofovir disoproxil (TD) and the salts, hydrates, tautomers and solvates thereof, in combination with emtricitabine” for the treatment of HIV.

In early 2017, a few months before EP 894 expired, Mylan tendered for public contracts in two Finnish health districts in order to supply its own generic medicine of tenofovir disoproxil in combination with emtricitabine. That September, Gilead filed suit against Mylan at the Market Court, accusing the generics producer of infringing its SPC. Mylan answered with a nullity claim before the same court.

At the end of 2017 the Market Court upheld a preliminary injunction on the basis of the SPC and prohibited Mylan from selling and importing its imitation product in Finland. The Supreme Court of Finland later revoked the PI in April 2019. Subsequently, in September 2019 the Market Court declared the SPC invalid and refused an appeal by Gilead.

Compensation called for

Mylan then applied to the Market Court to order Gilead to pay compensation for the injury caused by the PI amounting to €2,367,854.99 plus default interest. Finnish case law and the Code of Judicial Procedure provides for strict liability.

According to this, a person who obtains a provisional measure is liable to pay compensation if the intellectual property right on the basis of which the PI was granted is subsequently found to be invalid. However, when determining the amount of compensation, the court can also take into account whether the defendant enabled the injury to occur or failed to take reasonable measures to avoid or mitigate the injury and thereby contributed to its occurrence.

The Market Court asked the CJEU if a system of compensation based on strict liability is compatible with Article 9(7) of Directive 2004/48. The European court has now confirmed this.

Helsinki powerhouses

Swedish-Finnish full-service law firm Roschier represented Gilead in the CJEU proceedings. Partner and head of the firm’s IP practice Rainer Hilli has experience in CJEU cases concerning SPCs. He is also leading the proceedings for MSD in the dispute against Teva over Janumet. The firm is also active at the UPC, where it filed a claim for AIM Sport Vision against Supponor at the Helsinki local division.

Ben Rapinoja, partner at full-service firm Borenius, leads the case for Mylan. He has experience in pharma cases and is equally active in the CJEU case over Janumet. He is leading the latter case for MSD’s opponent Teva. Mylan (now Viatris) has been a client of Borenius for many years, with the IP team representing the generics manufacturer in several national infringement suits. Originally Anni Jäälinoja was part of the team working on the damages suit, but he has since moved to an in-house position at the Finnish company Neste.

For Gilead
Roschier (Helsinki): Mikael Segercrantz, Rainer Hilli (both partners)

For Mylan
Borenius (Helsinki): Ben Rapinoja (partner, lead); counsel: Saara Lapiolahti; associates: Jemina Bonsdorff, Ilana Elfving
In-house (London): Robert Fitt (senior patent litigation counsel)

Court of Justice of the European Union, 3rd Chamber, Luxembourg
Alfredo Calot Escobar (president), Küllike Jürimäe (rapporteur), Nuno Piçarra, Marek Safjan, Niilo Jääskinen, Miroslav Gavalec, Maciej Szpunar (advocate general)