articles

Case No C-473/22: Upcoming CJEU decision will regulate national liability regimes in PI proceedings

The Advocate General recently gave its opinion in the case No C-473/22 between Mylan AB (“Mylan”) and Gilead Sciences Finland Oy, Gilead Biopharmaceutics Ireland UC and Gilead Sciences Inc (“Gilead”).

The referral was made by the Finnish Market Court in proceedings concerning a claim for damages resulting from an unfounded preliminary injunction (“PI”) issued against Mylan. Under the Finnish system, the liability for such damages is deemed “strict”. In other words, the party that has enforced an unfounded PI is liable for any damages shown irrespective of other circumstances such as the level of care it has taken when evaluating the likelihood of infringement.

The case holds implications for all jurisdictions in the EU in which the same or similar strict liability regime is adopted into national law.

Referral in case No C-473/22: An overview

In the case that led to the damages claim which ultimately resulted in the referral, Gilead sought and obtained a preliminary injunction against Mylan on the basis of a so-called supplementary protection certificate (“SPC”). The SPC was subsequently revoked, resulting in the preliminary injunction issued against Mylan being formally unfounded.

Mylan brought a claim for damages before the Finnish Market Court seeking compensation for the losses caused by the preliminary injunction as it had prevented Mylan from selling the relevant pharmaceutical products in Finland for an extended period.

The Finnish Code of Judicial procedure provides that a party who obtains any provisional measure is liable for resulting damages, costs and losses if the intellectual property right relied on is subsequently found to be invalid. As there are no qualifying factors, the liability is deemed “strict”, i.e. liability without fault.

In view of the case law by the CJEU, particularly as codified in the judgment in Bayer Pharma (case No C‑688/17), the alignment of the Finnish compensation regime with the Article 9(7) of Directive 2004/48 on the enforcement of intellectual property rights (“Enforcement Directive”) was raised in the proceedings. The Finnish Market Court eventually decided to stay the proceedings and refer the question to the CJEU on July 14, 2022 requesting a preliminary ruling on the interpretation of Article 9(7).

Specifically, the Finnish Market Court inquired the CJEU to rule on the following questions:

• is the compensation regime based on strict liability, such as that in force in Finland is to be regarded as compatible with Article 9(7) of the Enforcement Directive,
• if not, what is the nature of the liability for under Article 9(7) of the Enforcement Directive,
• what circumstances must be taken into account in assessing the existence of liability and
• whether the assessment must be made solely on the basis of the circumstances known at the time when the provisional measure was obtained, or whether it permissible to take into account, for example, the fact that the intellectual property right on whose alleged infringement the provisional measure was based was subsequently, after that measure was obtained, found to be invalid ab initio and, if so, what significance is to be attached to that circumstance?

On September 21, 2023 the Advocate General Szpunar issued its opinion in the case No C-473/22 focusing on the compatibility of the strict liability regime with Article 9(7) of the Enforcement Directive especially in light of the Bayer Pharma case.

According to the Advocate General’s opinion, the national courts should be able to examine all the circumstances of the case in order to assess whether it is necessary to order a compensation under Article 9(7) in cases where unnecessary preliminary injunctions have been issued.[1] As the strict liability regime does not allow national courts to do so, the Advocate General deems that the strict liability regime applied in Finland is not compliant with the Enforcement Directive.

Potential implications

 The Advocate General’s opinion is not binding. However, should the CJEU agree with the Advocate General’s opinion, the shift from strict liability regime to another kind of system will have a significant impact on the current preliminary injunction and compensation regimes within the EU.

According to the Advocate General, simply the revocation of a preliminary injunction or other similar measure or finding an absence of the intellectual property right on which the preliminary injunction was based on is not sufficient to establish the unjustified nature of that application.

Such an approach creates a possibility of a number of potential defences against claims for damages. Consequently, it might become significantly more difficult for the injuncted parties to obtain damages or compensation for unnecessary preliminary injunctions, for instance in cases where the patent right on which the PI has been based on has been subsequently revoked.

Moreover, the assessment in the context of damages claims based on unfounded preliminary injunctions would become increasingly complex as the national courts would need to assess the circumstances of individual cases when determining whether the grounds for compensation exist. This is likely to significantly prolong and complicate the proceedings as well as increase costs and legal uncertainty in terms of the grounds on which compensation can be awarded.

During the CJEU proceedings, the Finnish Government explained in its observations that, in Finnish law, the strict liability of the applicant for provisional measures is the corollary to the significant ease of obtaining those measures. According to the Finnish Government, if the principle of strict liability were abandoned, the courts would be forced to examine more thoroughly the merits of the applicant’s claims. This implies that, at least in some countries, the abandonment of the strict liability regime might also complicate the preliminary injunction proceedings, which e.g. in Finland are typically rather quick and summary proceedings. This, in turn, might possibly increase the threshold for granting preliminary injunctions.

 Conclusion

The Advocate General’s opinion is not binding and it remains to be seen what the CJEU ultimately decides. Based on the usual timelines of CJEU proceedings, the CJEU’s decision could be expected in the first half of 2024. As the CJEU prepares to deliver its final judgment, now is the time for stakeholders in the EU member states to consider potential implications for their businesses.

Borenius Attorneys Ltd represents Mylan in the reported case.

[1] Opinion of the Advocate General (C-473/22), paragraph 42.

If you would like any further information, please contact the authors of this article:
Lasse Laaksonen, Wilma Kivilä, Hertta Puro.