Foreign pharmaceutical companies enforcing their patent rights in China may have more to worry about following the Chinese Supreme Court Decision in Wuhan Jingyuan v Fujikasui, Huayang, in December 2009. In this patent infringement court case, the Supreme Court cited “public need” in uphold the Fujian court’s decision to deny an injunction. Instead, the Court allowed the co-defendant, Huayang, to continue operations compensating the plaintiff, Wuhan Jingyuan with a court-set annual royalty of $36,000USD.
Wuhan Jingyuan v Fujikasui, Huayang
The defendant, Huayang Electric Power, a Taiwanese owned power plant in Fujian, was found to be infringing Wuhan Jingyuan’s patent by employing a patented component in desulphurisation equipment used to clean exhaust gases emitted from fossil fuel power plants.
The patentee sued for damages and an injunction preventing Huayang’s continued use of their patented component. The presiding Fujian Court, faced with the prospect of shutting down the power plant, was forced to find a compromise between the parties.
In May 2008, the Court instructed Fujikasui (manufacturer of the desulfurisation equipment) to pay $7.4 million USD in damages but denied the injunction which would have prevented Huayang’s continued use of the equipment. Instead, the Court instructed Huayang to pay royalties of $36,000USD annually until the expiration of the patent.
Supreme Court upholds Fujian Court in Wuhan Jingyuan v Fujikasui, Huayang
In December 2009, the Chinese Supreme Court upheld the Fujian Court’s judgment in a considerably unexpected decision. The Court held that it had discretion to consider measures other than an injunction, “if halting of the relevant act would cause a major imbalance in the interests of the parties, or would run counter to the public interest or is in fact unenforceable”.
Impact on pharmaceuticals
At first glance, the decision of the Chinese Supreme Court has a huge impact on the grant of injunctive relief in China. However, this case can be confined to the facts, as the overriding public interest was to avoid the closure of a power plant.
If the decision is interpreted narrowly, it would be difficult for a Chinese generic drug manufacturer to argue that it is in the public interest, on a finding of patent infringement, that an injunction should not be granted, particularly if the originator’s drug is available on the market. A possible scenario could arise if the drugs were in dangerously low supply yet crucially needed by China. However, this would be an issue of compulsory licensing, rather than injunctive relief. To date, no compulsory licence has been granted in China.