Context: It became known at a recent preliminary injunction (PI) hearing before the Unified Patent Court’s (UPC) Dusseldorf Local Division (LD) that the most fundamental question in Novartis v. Celltrion is what legal standard the UPC will adopt for the theory of imminent infringement. ip fray discussed the hearing in an August 6, 2024 article and a prior LinkedIn post.
What’s new: On Friday (September 6, 2024), the UPC handed down its decision as scheduled (PDF). It was unsurprising (and validated ip fray‘s prediction in the above-mentioned LinkedIn post) that the PI was denied on the basis of there being an insufficient showing of a first infringement being imminent. Seeking EMA approval of a medication (here, a biosimilar) and talking publicly about the fact that it has been developed are obviously parts of a process that tends to culminate in a product launch, but at this point there are no signs of Celltrion intending to go forward with the launch unless the patent-in-suit is invalidated or, at the latest, expires.
Direct impact: Novartis must have known that this PI request was ambitious from the get-go, but has sent out a strong message to the industry at large that it will protect its assets, particularly its Xolair cash cow. For that reason, it will want to appeal, though the outcome appears unlikely to change.
Wider ramifications: The Dusseldorf LD rejected Celltrion’s argument that the question of imminent infringement would have to be evaluated for each national part of the patent-in-suit (a bundle patent granted by the European Patent Office (EPO)) under the laws of the given country. It then pronounces a UPC standard for imminent infringement that requires all preparations to be “fully completed” and “infringement [being] only a matter of starting the action.” It clarifies that PI proceedings, unlike main proceedings, are not amenable to motions to stay proceedings (here, to await the outcome of Celltrion’s challenge to the patent-in-suit). And it reminds parties of their obligation to brief the court on claim construction, and to do so in a particularly concise and focused manner in a fast-track proceeding.
The truth will be somewhere in the middle between
- Novartis’s accusation that Celltrion was going to recklessly infringe its Xolair patent (EP3805248) and
- Celltrion’s defense that whatever it has been doing so far was done with a view to the September 2025 expiration of the patent.
There could be situations in which Celltrion might go ahead and launch its products on the basis of the assumption that Novartis wouldn’t be able to obtain a PI for lack of a likelihood of success on the merits, which in this case would come down to validity. The Dusseldorf LD’s decision says the infringement allegations weren’t even contested.
There would be a strong incentive to take a calculated risk: time to market. The sooner Celltrion can launch, the faster it can gain market share. And others may be standing ready to launch their competing products once the patent expires. Celltrion, by virtue of having created a biosimilar, could pre-empt certain competitors.
The UPC’s Court of Appeal (CoA) will probably adjudicate Novartis’s appeal rather swiftly, but it will take a number of months, inching closer and closer to the patent’s expiration date and making Celltrion’s defense more credible. The other thing that will happen now is an October 4 hearing in the District Court of The Hague, where Celltrion is challenging the validity of the patent-in-suit in main proceedings. Should a decision in Celltrion’s favor come down after that hearing, the picture could change. Celltrion might be emboldened and go ahead with its launch even prior to expiration. That could also lead to interesting discussions before the UPC’s CoA.
The Dusseldorf LD did not reach validity. It did address claim construction, and criticized Celltrion for having made it too difficult and time-consuming for the court (in light of the time constraints inherent to PI proceedings) to figure out its related argument. But validity did not have to be discussed in the absence of an imminent infringement.
The closest thing to a showing of a clear and present danger of an imminent infringement was that a Novartis employee overheard, at an industry event in Spain, a Celltrion person saying something about price negotiations to a third party. As the Dusseldorf LD notes, that amounts to hearsay. The order does not pronounce a standard for the (in)admissibility of hearsay evidence, but resolves this part by finding that there is simply contradicting testimony by employees of both parties. In Germany, where two judges of the panel of four live, this situation is commonly described as “Aussage gegen Aussage” (“testimony versus testimony”) and considered one in which neither side has proven its point. That approach is different from the one in the U.S. where judges often consider one witness more credible than another (a point that a U.S. court wouldn’t have reached here as the testimony here would not have qualified for an exception from the hearsay rule).
The Dusseldorf LD’s imminent-infringement standard, especially as pronounced in the headnote, appears very strict. It reads like the only thing missing for the infringement to occur would be for an executive to green-light a product launch and for someone to push a button. The headnote does say that this must be assessed on a case-by-case basis, and obviously that involves industry-specific considerations, but one could also imagine a standard more favorable to right holders.
In this particular case, the facts suggest that Celltrion is not going to be a reckless infringer. But depending on the progress it makes with its patent invalidation efforts, it may decide to take its chances.
Panel: Presiding Judge (and here, judge-rapporteur) Ronny Thomas, Judge Dr. Bérénice Thom, Judge Alima Zana (Italy) and Technically Qualified Judge John Meidahl Petersen (Denmark).
Lead counsel for plaintiffs: Freshfields Bruckhaus Deringer‘s Dr. Frank-Erich Hufnagel and Carpmaels & Ransford‘s Cameron Marshall.
Counsel for defendant: Bird & Bird‘s Marc Van Wijngaarden, Carlos van Staveren and Emilia Zalewska (Netherlands) and Oliver Juengst, Dr. Moritz Schroeder, Dr. Andreas Obermeier (Germany) with HOFFMANN EITLE patent attorneys Dr. Leonhard Werner-Jones and Dr. Sebastian Giese.