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Novartis versus Mylan, PI judge District Court of The Hague 22 March 2022, ECLI:NL:RBDHA:2022:2490 (interlocutory decision)

Market entry by the generic pharmaceutical company Mylan before the grant of a Novartis patent – which will be infringed once granted – is not unlawful. Not even if Novartis’ patent will be granted with certainty and the wording of the claims has already been established. This was ruled by the PI judge of the District Court of The Hague in an interlocutory decision on 22 March 2022.

Future patent grant
Novartis produces the drug Gilenya, containing the active ingredient fingolimod for the treatment of relapsing-remitting MS. Novartis’ protection for the compound expired in the Netherlands on 22 March 2022. However, soon – presumably in June – Novartis will be granted a patent which will extend protection for Gilenya.

Mylan intends to enter the market shortly after 22 March 2022 with a generic fingolimod product, since Novartis’ market exclusivity expires on that date. With the granting of its patent imminent, Novartis tries to prevent the market entry of Mylan’s generic fingolimod by means of PI proceedings. After all, Mylan’s generic fingolimod will infringe Novartis’ (pending) patent once it grants.

Unlawful act?
In these preliminary relief proceedings, Novartis argued that Mylan is acting unlawfully by entering the market with its generic product after 22 March 2022, because it is aware of the expected grant of the pending Novartis patent in the course of June 2022 and it knows that its generic product will infringe this patent.

To support its claims, Novartis refers to the legal system and legislative history of the Dutch Patents Act. In sum, Novartis argues that a patent would have a material effect from the application date. This would result from the desired total duration of protection of 20 years and the (former) national legislation that the applicant for a Dutch patent was already entitled to damages and lost profits based on wrongful acts before grant of the patent, but after examination by the granting body and publication of the patent application.

The PI judge does not follow Novartis’ line of reasoning. The PI judge considers that – inter alia – a system as the Dutch one, under which the patent does not offer (effective) protection for 20 years with retroactive effect, is compatible with the TRIPS Agreement, as long as the requirement of a sufficiently expeditious application procedure is met. Novartis has not claimed that this requirement has been violated.

Furthermore, the PI judge emphasised that granting a right with retroactive effect does not mean that a substantive right already exists before the grant. Retroactive effect means the opposite. The legislator did not intend to give the applicant for a European patent a substantive right prior to grant, not in tort either. The legislative history of the former Dutch Patent Acts cannot – contrary to what Novartis argues – be applied to the present situation because the Dutch system for granting patents under the old Dutch Patents Act was essentially different from the current system for granting European patents.

Under the current regulation, the legislator has provided for the possibility for the patent holder to claim for reasonable compensation from the person or entity that “infringed” the patent before it was granted (Article 72 of the Dutch Patents Act 1995). This regulation has a negative consequential effect: because the legislator has foreseen this specific situation and has granted the patent holder a claim for reasonable compensation, there is no room for granting a broader right than the right to that reasonable compensation.

Role of (market) circumstances
In addition to the foregoing, Novartis argued that the market introduction of generic fingolimod must be deemed unlawful in light of the circumstances of the case: Mylan would only be able to bring the generic product on the market for a few months (until the patent grant). Those few months would lead to price deterioration for Gilenya and irreparable damages for Novartis.

However, that does not make Mylan’s actions unlawful either. There is simply no room for complementary effect of common law. The PI judge notes that the regulation of Article 72 of the Dutch Patents Act must concern a reasonable compensation. In the weighing of what is reasonable, factual circumstances may be included, such as the aforementioned market circumstances.

Novartis’ attempt to prevent market entry by Mylan is not incomprehensible, but the outcome will not come as too big of a surprise to patent law specialists. However, the case does not end here yet. In the preliminary relief proceedings, Mylan has been given the opportunity to elaborate on its invalidity defence regarding Novartis’ patent pending, after which Novartis can respond. At the same time, Novartis’ request to appeal against the PI judge’s decision on the situation before patent grant has also been granted. Therefore, the Court of Appeal may follow-up with an interesting plot twist. To be continued.

The judgment (in Dutch) can be found here.

Headnote: Daisy Termeulen, Simmons & Simmons