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Economic Analysis of the Risks Associated with Seeking a Preliminary Injunction
Published online by Cambridge University Press: 20 January 2017
Extract
An issue that may arise for both the plaintiff and defendant in a patent dispute involving pharmaceutical technology concerns the risks associated with selling an allegedly infringing product prior to the dispute being resolved. The plaintiff has the option to seek a preliminary injunction. Deciding whether to grant an injunction involves fact specific analysis. The economic components in such an analysis, which are addressed in this report, are: assessing whether the plaintiff will suffer irreparable harm without an injunction, measuring the balance of harms to the plaintiff and defendant, and evaluating whether the public interest will be served by an injunction.
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References
1 See Huw Evans and Pam Taak, “Preliminary Injunctions Alive and Well – A View from Europe,” IP Federation, December 16, 2011, https://www.google.be/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0ahUKEwjh3q6myMfLAhVEYQ8KHWpzAHkQFggcMAA&url=http%3A%2F%2Fwww.ipfederation.com%2Fdocument_download.php%3Fid%3D909&usg=AFQjCNGz0RZUYkXVt5zTk8P0EjO6utSG5A&cad=rja. This article also states that a PI may be referred to as an interim or interlocutory injunction in Europe.
2 Such situations arise in the U.S. as a result of provisions in the Drug Price Competition and Patent Term Restoration Act of 1984 (U.S. Public Law 98-417), which is referred to as the Hatch- Waxman Act.
3 See Susan Decker, “Amgen, Novartis Battle in U.S. Court over Neupogen Copycat,” Bloomberg Business, June 3, 2015, http://www.bloomberg.com/news/articles/2015-06-03/amgen-novartis-battle-in-court-on-copycat-version-of-neupogen. Biosimilar products are covered by the Affordable Care Act of 2010 (U.S. Public Law 111-148).
4 See, for example, Simon Holzer, “Requirement of Irreparable Harm: Swiss Federal Supreme Court Puts Spokes in Appellants’ Wheels in Appeals against Decisions in Summary Proceedings”, Kluwer Patent Blog, April 3, 2015, http://kluwerpatentblog.com/2015/04/03/requirement-of-irreparable-harm-swiss-federal-supreme-court-puts-spokes-in-appellants-wheels-in-appeals-against-decisions-in-summary-proceedings/.
5 By irreparable harm, I mean harm that cannot be remedied by the payment of monetary damages at the time of trial.
6 See Kevin Noonan, “Utah Judge Denies Myriad's Preliminary Injunction Motion”, Patent Docs, March 11, 2014, http://www.patentdocs.org/2014/03/utah-judge-denies-myriads-preliminary-injunction-motion.html.
7 For ease of exposition, I assume a single patent is at issue. The analysis is similar when a patent dispute involves multiple patents.
8 Documents obtained in discovery in which the imitator and the patent holder identify the product covered by the patent at issue and the imitator's product as competitive alternatives are helpful.
9 Georgia-Pacific Corp vs. United States Plywood Corp., 318 F Supp. 1116, 1120 (S.D.N.Y. 1970).
10 Documents in which the patent holder identifies increasing promotional activities as a strategy for managing risk factors such as increased pricing pressure and intense competition from entry by the imitator are helpful.
11 The patent owner may not recover all the costs associated with patent infringement litigation (e.g., the opportunity costs of management time due to focusing on the litigation).
12 The patent holder may be the leader in the area of treating a particular medical problem due to the product covered by the patent at issue. The patent holder's overall strategy for the product covered by the patent at issue may be to leverage its reputation to other therapeutic areas.
13 The patent holder's activities in the form of direct-to-consumer advertising, direct contact of health care providers by sales representatives, journal advertising, sponsoring medical symposia or other activities geared toward disseminating information about its products will be restricted.
14 The types of products that are not related to the product covered by the patent at issue would likely not be captured in the analysis of convoyed sales.
15 I understand that the patent holder will be able to recover damages only on lost sales of products functionally related to the product covered by the patent at issue.
16 In general, only one project out of every 10 that begins as an idea results in a commercial product. However, there is no guarantee that the product will be successful once available for sale.
17 Joseph DiMasi, Henry Grabowski, and Ronald Hansen, “Cost to Develop and Win Marketing Approval for a New Drug is $2.6 Billion” (press release), Tufts Center for the Study of Drug Development, November 18, 2014, http://csdd.tufts.edu/news/complete_story/pr_tufts_csdd_2014_cost_study.
18 Levin, Richard, Klevorick, Alvin, Nelson, Richard, and Winter, Sidney, “Appropriating the Returns from Industrial Research and Development”, Brookings Papers on Economic Activity, Volume 3, 1987, pp. 783–820 CrossRefGoogle Scholar, http://www.brookings.edu/∼/media/projects/bpea/1987%203/1987c_bpea_levin_klevorick_nelson_winter_gilbert_griliches.
19 Most research based pharmaceutical companies are members of the Pharmaceutical Research and Manufacturers of America (PhRMA). In 2014, PhRMA member companies invested $51.2 million in biopharmaceutical R&D. Andrew Powaleny, “Fact Check Friday: The Truth about Industry's Role in R&D”, The Catalyst, PhRMA, October 23, 2015, http://catalyst.phrma.org/fact-check-friday-the-truth-about-industrys-role-in-r-and-d. Research based pharmaceutical companies usually fund R&D from current revenues.
20 At the extremes, the foregone research may have identified the cure for cancer or failed to generate any useful scientific information.
21 “Issues Document: Patent Expirations (2013–2017)”, Emerging Therapeutics, Express Scripts Holding Company, updated May 6, 2013, http://www.centerlighthealthcare.org/images/uploads/Brand_Name_Drugs_with_Patent_Expirations_2013-_2017.pdf.