AstraZeneca not held liable for additional healthcare costs on appeal – healthcare insurance company can’t claim damages for patent enforcement, at least not in this case
On 14 October 2020 the District Court The Hague held AstraZeneca liable for damages incurred by healthcare insurance company Menzis, resulting from an unjustified enrichment of AstraZeneca.[1] This in turn resulted from enforcing a patent that was later invalidated by the Court of Appeal The Hague. I commented on this judgment in an article, published on www.ie-forum.nl on 15 October 2020, in which I called this a landslide decision, because this was the first such claim by an insurance company.[2] The judgment has now been overturned by the Court of Appeal.
The District Court had held that enforcing a preliminary injunction against Sandoz constituted a tort, since the patent was later invalidated with retroactive effect, which meant that retroactively AstraZeneca was not entitled to such enforcement. Sandoz is a generic company that offered the generic product at a lower price than AstraZeneca’s product. Menzis has to repay patients for the costs of the product at the higher level. Menzis had actually claimed that there was strict liability for such alleged wrongful enforcement. Although the District Court was not very specific on this, it seemed to assume such liability quite easily.
The Court of Appeal disagrees.[3] It deals extensively with liability for enforcement of a patent that is later invalidated. The most relevant facts are as follows. AstraZeneca had a basic patent for quetiapine (Seroquel®), and a consecutive SPC which expired on 23 March 2012. AstraZeneca also had a later delayed release formulation patent EP 0 907 364, which was the subject of the litigation. The UK part of this patent was held invalid by the High Court in London on 22 March 2012, which was confirmed by the Court of Appeal on 30 April 2013. The District Court The Hague however held the Dutch part of the patent valid in an action on the merits brought by Sandoz in a judgment of 7 March 2012.[4] There was no counterclaim for infringement in this action. AstraZeneca then claimed a preliminary injunction against Sandoz, which was awarded by the District Court The Hague on 15 August 2013.[5] AstraZeneca enforced this judgment by serving it on Sandoz on 20 August 2020. Finally the Dutch part of the patent was invalidated by the Court of Appeal on 10 June 2014 for lack of inventive step.[6] Generic companies then started marketing quetiapine in July 2014.
Menzis claimed that there is strict liability for enforcing the preliminary injunction, but the Court disagrees. Referring to the Supreme Court judgment in CFS Bakel v Stork (of 2006), it reiterates that there is no strict liability in the relationship between the patent owner and the alleged infringer if the patent is later invalidated.[7] A certain level of culpability is always required.
There was an earlier Supreme Court judgment from 1984 which seemed to indicate otherwise (Ciba Geigy v Voorbraak),[8] so the Court also had to deal with that. In Ciba Geigy v Voorbraak the Supreme Court ruled that a party that enforces a preliminary injunction would in principle be liable if it is later decided in full proceedings on the merits that there was no right to enforce. According to the Court of Appeal in the AstraZeneca case that judgment was limited to the facts at hand. The liability in that case was also related to the fact that forfeited monetary penalties for violation of a preliminary injunction could not be reversed by the judgment on the merits, that could only be done in an appeal against the preliminary injunction. In that specific case Voorbraak had not filed such an appeal. Apparently the damage claimed by Voorbraak included penalties paid to Ciba Geigy.[9] The Court of Appeal concludes that this judgment at least doesn’t provide strict…
