The Netherlands

Dutch court extends cross-border jurisdiction in Novartis and Pharmathen battle

Pharmathen is still unable to sell its cancer drug Okrodin in many European countries after the Court of Appeal in The Hague largely upheld a preliminary injunction in a lawsuit brought by Novartis. But, unlike the District Court of The Hague, appeal judges found Pharmathen Global has directly infringed the patent, even though the drug is manufactured by its Greek subsidiary Pharmathen SA. This could strengthen the jurisdiction of the Dutch patent courts in cross-border injunctions.

6 December 2022 by Mathieu Klos

Pharmathen, Okrodin, Novartis, Netherlands, patent litigation Largely upholding a first-instance decision, the Court of Appeal in The Hague has ruled that Pharmathen may not market its cancer drug Okrodin outside Greece until further notice ©natali_mis/ADOBE STOCK

The Court of Appeal in The Hague ruled in mid-November that Pharmathen may not market its cancer drug Okrodin outside Greece until further notice. Thus, the court largely confirmed a cross-border injunction issued by the District Court of The Hague in August 2022 (case ID: 200.314.300/01), although the second-instance court has now excluded Greece from its remit.

Furthermore, the appellate judges no longer considered Pharmathen Global liable only for acting unlawfully in causing the subsidiary or distributors to infringe the patent. Instead, the onus is now on the parent company.

A valuable product

The initial ruling prevented the company from selling the drug to distributors anywhere in Europe where the patent is in force. The District Court judges ruled that parent company Pharmathen Global infringed Novartis patent EP 23 77 519 B1, although it is the company’s Greek subsidiary, Pharmathen SA, that actually manufactures the generic drug.

EP 519 pertains to a slow-release hormonal treatment used by medical professionals to treat cancer patients. The patent expires in November 2023. Since the manufacture of the drug is notably difficult, and given its prevalence as a cancer treatment, the drug is likely worth hundreds of millions of euros to either party in Europe.

Novartis has enforced the patent in the Netherlands, Austria, Belgium, France, Germany, Greece, Italy, Liechtenstein, Portugal, Spain, Switzerland, Turkey and the UK.

Partial success for Pharmathen

However, unlike in the first judgment, the appellate judges have not included the Greek Pharmathen SA in their decision. During the course of the trial, a Greek court had already rejected a claim by Novartis. It ruled that Pharmathen SA did not infringe EP 519. According to the Dutch appellate judges, the District Court should not have overruled this judgment in accordance with international legal principles.

The judges’ reasoning is based on the fact that the Dutch court’s PI ruling effectively overturned the Greek court’s dismissal of the case. However, the Court of Appeal in The Hague said that only a Greek court is entitled to take such a measure. Now, the Dutch cross-border injunction no longer extends to Pharmathen SA insofar as the Greek part of EP 519 is concerned. The appeal judges referred this part of the judgment back to the District Court.

However, this does not affect the actions of Pharmathen SA outside Greece. In addition, the Dutch Court of Appeal judges continue to hold Pharmathen Global responsible for the actions of Pharmathen SA. In this respect, it is disputed what practical consequences the ruling will have for Greece.

Parent companies beware

Elsewhere, the appellate judges in The Hague went beyond the first-instance ruling. They no longer considered Pharmathen Global liable only for acting unlawfully in causing the subsidiary or distributors to infringe the patent. Rather, the court now holds the Amsterdam-based parent company directly responsible for infringing the Novartis patent.

According to experts, this also goes beyond the previous case law of the Dutch patent courts on cross-border injunctions.

For Pharmathen Global, the consequences of the first-instance ruling remain unchanged. Except in Greece, the company may not produce and distribute Okrodin. However, the ruling could have far-reaching consequences for the parent companies of international companies. This is because the court extended the jurisdiction of the Dutch patent courts in cross-border injunctions, which have long been a specialty of the Netherlands

Otto Swens

As experts told JUVE Patent, many companies with business in Europe have a presence in the Netherlands for tax reasons. The liability for managing directors is also lower. Now such companies must take great care not to actively participate in patent infringement committed by subsidiaries in other countries.

Another appeal likely

It is not clear what practical consequences the ruling will have for Pharmathen in the long term. The company can appeal to the Dutch Supreme Court. In view of the current consequences and the product’s economic importance, experts consider this certain.

Meanwhile, Pharmathen announced it would abide by the ruling. A spokesperson told JUVE Patent, “We are satisfied that The Hague Court of Appeal has recognised that the Greek entity is not injuncted in Greece and thereby effectively upheld the positive earlier decision we had received from the Greek court. We are working closely with our customers and partners to follow the guidance from The Hague judgment. We will also pursue all necessary appeals and proceedings on the merits of the patent in suit.”

In addition, it is considered likely that Pharmathen Global will examine whether the consequences of the ruling can be mitigated by a different corporate structure for the European business. Pharmathen could also file a nullity suit against the Novartis patent. So far, however, Pharmathen has not taken this step.

In the Netherlands, Novartis is only taking action against Pharmathen by way of a preliminary injunction. There is currently no main action for patent infringement.

Rutger Kleemans, partner, Freshfields Bruckhaus Deringer

Rutger Kleemans

Advisors remain the same

In the second instance, both companies relied on the same advisors as in proceedings before the District Court of The Hague. A team from Freshfields Bruckhaus Deringer, led by partner Rutger Kleemans, acted for Novartis. Freshfields has worked alongside Novartis since 2009.

Amsterdam IP boutique Vondst is acting on behalf of Pharmathen, with partner Otto Swens leading the team. Pharmathen is a new client for the Dutch firm. Previously, it has represented similar generic pharmaceutical companies such as Teva and Viatris. Behind the scenes, a London team from Kirkland & Ellis, led by Nicola Dagg and Peter Pereira, is advising Pharmathen Global on litigation strategy in Europe.

For Novartis
Freshfields Bruckhaus Deringer (Amsterdam): Rutger Kleemans, Jelle Drok (partners); associates: Ruben Ladde, Allard van Duijn, Auke-Frank Tadema
V.O. (Amsterdam): Martin Klok (patent attorney)

For Pharmathen
Vondst (Amsterdam): Otto Swens, Ricardo Dijkstra, Arvid van Oorschot (partners)
De Vries & Metman (Arnhem/Amsterdam): Lilian Hesselink, Jeannette Verbart (patent attorneys)

Court of Appeal The Hague, the Netherlands
Peter Blok (presiding judge), Rian Kalden, Anselm Kamperman Sanders