Cephalon, Inc & Others v Orchid Europe Limited & Generics(UK): preliminary injunction refused despite failure of generic entrants to “clear the way”

31 January 2011

Gerry Kamstra

In his judgment of 19 November 2010 Mr Justice Floyd ([2010] EWHC 2945 (Pat)) considered an application by Cephalon for a preliminary injunction to restrain infringement of its two EP(UK) patents (relating to modafinil (a drug used for the treatment of narcolepsy) in the form of particles of a defined size) by Orchid and Generics (UK) (trading as Mylan). Orchid supplied the allegedly infringing modafinil to Mylan - and to Orifarm Generics (a Scandinavian generic company, against whom a preliminary injunction had been granted by the Swedish Court). 

Although Cephalon’s experimental evidence in relation to the size of the particles in the Defendants’ product was criticised and described by the judge as “very weak”, the judge concluded that the case on infringement “just about” cleared the threshold required for a preliminary injunction, namely that there was a serious issue to be tried. Turning to validity of the patents, although Cephalon’s points on non-obviousness were described by the judge as “not very promising” he was not persuaded that Cephalon had no arguable case on validity. The judge concluded then that this was not a case where at this stage the merits of the parties’ cases were so clear cut that they should be taken into account in addressing whether an injunction should be granted.

The question of whether a preliminary injunction should be granted therefore turned upon the so-called “balance of convenience”, ie weighing the likely injustice of granting an injunction which it later turns out should not have been granted against the injustice of withholding one which should. Critically, the judge was not persuaded by Cephalon’s evidence that Cephalon would not be able to increase the price of its modafinil product after a period of generic competition from the Defendants. The evidence of a Cephalon witness, to the effect that it offered temporary discounts to counter parallel imports of its product, persuaded the judge that any price erosion would be reparable. Importantly, the judge also took into account the fact that Cephalon’s product had been on the market for some time: “The market for modafinil is a relatively mature one, allowing one to assess at the inquiry as to damages what profits the claimants would have made absent competition. By contrast one has no yardstick by which to judge how much of that market the defendants would have taken if allowed to compete instead of being enjoined”. Finally, the judge decided that the Defendant’s failure to seek revocation of the patents and/or seek a declaration of non-infringement before launching their products (“clear the way”) was not such a factor that he was “obliged to give [it] so much weight that it necessarily swamps all the others”, ie the other factors carried more weight in this case. Accordingly the judge refused to grant a preliminary injunction and ordered an expedited trial in April 2011.