On 28 February, the High Court handed down an interim judgment in Eli Lilly v Neopharma and Anor (Howrey acting for Eli Lilly) in which it ordered the disclosure of information relating to sales of the (allegedly) infringing pharmaceutical Olanzapine Neopharma. The information requested included customer details and the amounts and dates of sale. This is a ground-breaking decision and, we believe, the first time an order for the disclosure of information relating to customers has been made at the interim stage.

Whilst this application was based on very specific facts, the principles expressed by Roger Wyand QC, sitting as Deputy Judge, should provide a further level of comfort for research based pharmaceutical companies that seek to obtain pre-action undertakings from generic companies to stay off the market pending patent validity/infringement actions relating to their products.

The Facts

Eli Lilly was engaged in patent revocation proceedings brought by third parties in relation to its patent for olanzapine, the trial of which is due to be heard in July. In November 2007, Neopharma obtained marketing approval for olanzapine in Europe. Eli Lilly therefore wrote to Neopharma requesting samples of its products, and seeking undertakings that it would not launch in EU countries in which the patent remains in force. Neopharma did not (at that stage) give the undertakings sought, and said that samples were not available, but that it would provide them when they were.

On 17 January 2008, Neopharma indicated that it would provide samples the following week. However, it later came to light that, on the following day, an undisclosed volume (said to be its entire stock) of Olanzapine Neopharma tablets had been sold. In February, Eli Lilly became aware of Neopharma's olanzapine tablets on the market and immediately started infringement proceedings, making an urgent application for an interim injunction restraining further sales. The application was heard on 20 February 2008: Neopharma and Neolab (which was the entity selling the products) gave undertakings in the form requested by Eli Lilly, in return for the usual cross undertaking for damages. Eli Lilly also sought the order that Neopharma/Neolab disclose details of all their sales of olanzapine.

The Judgment

In granting the Draconian order for the disclosure of the identity of Neolab's customers and the sales made to them, the Deputy Judge confirmed that the principles on which he should decide whether to exercise his discretion were similar to those governing the grant of an interim injunction. He found that both parties might suffer irreparable damage if the order for disclosure went against them. Nevertheless, he noted that, once proceedings had started, Neopharma and Neolab had voluntarily given an undertaking not to sell any more product, and that this effectively "amounted to an acceptance at that stage that the balance of convenience was in Eli Lilly's favour". This concurs with the now well-known "clear the way" principle approved by the Court of Appeal in SmithKline Beecham v Apotex.

Key to this judgment were findings: (i) of the "lack of candour" on the part of Neopharma/Neolab in the pre-action correspondence; and (ii) that Neopharma/Neolab could have broken the deadlock in the pre-action correspondence by telling Eli Lilly they were just about to launch. Instead they "did the reverse in that they hid the fact of importation from Eli Lilly until they had sold all the stock".

Neopharma/Neolab were refused leave to appeal by the Deputy Judge and by the Court of Appeal.

Comment

There is a common understanding within the pharmaceutical industry that where a generic pharmaceutical company does not take action in relation to relevant patents before launching its product, whether by way of a declaration of non-infringement or more commonly a revocation action, it is very likely to be injuncted. This is commonly referred to as the "clearing the way" principle and means that most such companies will provide an indication that they will not launch, pending judgment in the main action concerning the validity or infringement of the patent covering their product. In practice, the "clearing the way" principle means that the innovator and generic companies engage in correspondence around the time when the marketing authorisation for the generic products is anticipated or granted.

This judgment confirms that, if an indication is expressly given by the generic company that it will not sell, but then that is not honoured, the court will come down heavily on the generic company and do what it can to assist the patentee in minimising any potential loss, including ordering disclosure of the generic company's customers and the amount of products sold. Indeed, from this judgment, it would appear that the court would take the same approach if the generic product is sold where the patentee has been led to believe by the generic company that their products would not be launched, pending resolution of the main action.

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