Court refuses injunction in Neurim and Mylan insomnia drug dispute

The UK Court of Appeal released its decision in the case between Neurim and Mylan, as well as Neurim’s licensee Flynn, on 26 June. The judges decided to uphold the first instance decision to deny an interim injunction against the generics company. The decision means that Neurim’s attempt to block Mylan’s launch of a generic version of Neurim’s insomnia drug has failed. It could impact patentees in future battles against generic pharmaceutical companies.

Indeed, the Court of Appeal has confounded the expectations of innovator pharmaceuticals – namely, that the rendering of damages is sufficient compensation for market entry by generic products. Some observers expect the judgment will encourage generics companies to try and bring their products to market earlier than they previously would have considered.

Neurim and Mylan in the market

The patent in question, EP 14 41 702 B1, covers the scope of a drug to combat insomnia. Neurim owns the patent, which is due to expire in August 2022. The patent is second medical use. Neurim’s licensee Flynn has a melatonin-based insomnia drug, branded under Circadin, currently in market circulation. Mylan plans to release its own generic version of the drug in the UK. The company obtained marketing authorisation for its generic version in December 2019.

However, the planned launch of Mylan’s generic drug prompted Neurim and Flynn to launch infringement proceedings against Mylan, which in turn launched a claim for revocation. As a result, Neurim sought an interim injunction against Mylan, pending the main invalidity and infringement trial which is due to be heard in October 2020. The High Court heard the claim for an injunction on 3 June 2020, via video link. Subsequently, however, the court refused to grant an injunction against Mylan. Last week, the Court of Appeal upheld the first instance decision.

Turn out for the books

At the first instance hearing, the court deemed an interim injunction unnecessary. Instead, the court recommended that Mylan’s paying of damages would be sufficient compensation against the market introduction of its generic drug. The unusual judgment is even recognised by presiding judge Marcus Smith in his first instance decision: “I accept that the status quo points towards the granting of an injunction: but this is not, in this case, a particularly strong factor and in any event cannot affect my conclusions as to the adequacy of damages.”

Smith’s judgment is based on the 1975 case between American Cyanamid and Ethicon, the so-called ‘balance of convenience’. Here, the judgment lays out four questions regarding damages which must be considered before the court grants an interim injunction in such instances. Using this, Smith accepted the first question as sufficient grounds to dismiss the injunction request, a decision upheld by the Court of Appeal judges.

Thus, Neurim and Flynn appealed the first instance judgment,arguing the decision would create a ‘price spiral.’ Neurim also argued that it could face losses if the court expedited the trial for another one to two years. However, the Court of Appeal judges dismissed Neurim’s assertion that the decision could negatively impact the pharmaceutical industry.

In October 2020, the parties face the main trial to decide on revocation and infringement of the patent. The judges found that four months of competition would not amount to substantial losses experienced by Neurim over two years before the patent expires, and thus threw out Neurim’s argument regarding damages. The Supreme Court has rejected a further appeal by Neurim and Flynn against the injunction dismissal. All parties are now focused on the October hearing.

EPO intervention

In May 2017, the European Patent Office granted EP 702. However, after the office granted Neurim’s patent, Mylan opposed its granting. As a result, the EPO Opposition Division revoked the patent in November 2019. Neurim has appealed this decision.

However, the patent does not expire for over two years, meaning the Opposition Division will not release its appeal decision until after the patent’s expiry. Parallel litigation proceedings regarding the patent are also ongoing in Denmark, Sweden and Australia, although not against Mylan. Another generics company is involved instead.

Joined-up thinking

Flynn is a licensee of Neurim, with the London offices of Gowling WLG and Pinsent Masons acting side-by-side for the two plaintiffs. Indeed, the team acted almost as one in the proceedings.

Paul Inman

Accordingly, the same barrister from Three New Square chambers, Andrew Waugh, acted for both firms and companies. Pinsent Masons and Flynn have a long-standing relationship; partner Clare Tunstall, who is head of IP and life sciences at Pinsent Masons, brought the client over from her previous firm, over ten years ago. However, Paul Inman led the case for Flynn.

Matthew Royle

Taylor Wessing has a long history of acting for generics companies, with the firm representing Mylan for almost 20 years.

For example, in the last year the London office of Taylor Wessing has represented Mylan against Warner-Lambert over pregabalin, and against ICOS and Eli Lilly in a revocation case over tadalafil.

For Neurim
Three New Square (London): Andrew Waugh (barrister)
Gowling WLG (London): Paul Inman (lead); associates: Christopher Freeth, Daniel Down
In-house: Nava Zisapel (founder, patent inventor)

For Flynn
Three New Square (London): Andrew Waugh (barrister)
Pinsent Masons (London): Christopher Sharp (lead); associate: Anna Harley
In-house: David Fakes (CEO)

For Mylan
11 South Square (London): Mark Vanhegan, Adam Gamsa (barristers)
Taylor Wessing (London): Matthew Royle (lead); associates: Iona Macmillan Douglas
In-house: Rob Fitt (senior patent litigation counsel), Becky Harris (patent counsel)

UK Court of Appeal, London
Christopher Floyd, Richard Arnold, Stephen Males