The court of Milan on interim non-infringement proceedings in Novartis v. Mylan: the applicant’s interest in the action and the danger in delay

(Original Italian version is published also on Diritto24 – Il Sole 24 Ore)

By order of 19 June the Business Court of Milan pointed out the difference between interest in an action and the danger in delay in interim declaratory judgment actions for the ascertainment of non-infringement (already discussed here and here on this blog).

The complex dispute from which the order arises still sees the pharmaceutical companies Novartis and Mylan as opposing parties. The bone of contention is the drug “Rivastigmine” marketed by Mylan, constituting the generic version of the Novartis transdermal patch “Exelon”, which is still covered by a patent. In summary, Novartis, in becoming aware of the imminent commercialisation of the generic product, unsuccessfully sent a warning letter requiring that it was not sold before the patent expires, and then started ordinary infringement proceedings against Mylan before the Court of Turin. Meanwhile, Mylan had commenced interim proceedings before the Court of Milan seeking an interim declaratory judgment of non-infringement in the light of the alleged invalidity of the Novartis patent. Following the rejection of its motion, Mylan lodged an appeal that was decided by the order in question.

In rejecting Mylan’s appeal for lack of danger in delay, the order takes the opportunity to clarify the difference between the requirements of interest in an action and the danger in delay, both required (along with the prima facie case) in order for an interim measure to be granted.

In relation to the interest in an action, the order departs from the appealed preliminary decision which, to tell the truth, going against the provision of the law (Art. 120 co. 6bis IP Code), had generally excluded the admissibility of interim non-infringement proceedings due to absolute lack of interest in the action. The panel of three judges instead issued this order affirming to consider “generally admissible an action for a negative declaration by way of interim proceedings, aimed at eliminating an objective uncertainty hanging over an entrepreneur whose freedom of economic initiative appears to be conditioned by the claims, objections or actions carried out by a competitor who opposes, to the activity of the first one, the existence of patents allegedly infringed or capable of being infringed by the presence on the market of a competitor’s product”. It is therefore in Mylan’s interest to take action for a declaration of non-infringement, “given that the objective state of uncertainty as to the legality of the production and marketing of Mylan Rivastigmine is evidenced by the warning letter sent in December 2013 by Novartis”, and confirmed by the subsequent commencement of proceedings on the merits in Turin by Novartis.

However, the Court also said that the existence of such a state of uncertainty cannot in itself also ground the different requirement of danger in delay, i.e. the irreparable harm that the plaintiff would suffer in waiting for the decision of the merits proceedings, which determines the urgency to grant the interim measure. In order to verify the existence of this second requirement, it is necessary to consider whether the circumstances of each case actually determine an urgent need to issue a precautionary measure.

In this regard, the Court states that “as a general rule it must be agreed that such urgency can be grounded on certain conditions that objectively limit and condition the economic freedom of the entrepreneur who is subjected to the conduct or actions by a competitor contesting the legality of the sale of a given product, the relevance and/or intensity of which actions may induce the applicant to stop or postpone its plans for placing the product on the market, to limit the spread of the distribution of the product itself, interrupting the contacts needed to organise the distribution in other markets or territorial areas, or in the event that such initiatives are likely to have adverse effects on the market or on the development of the distribution of the product itself (e.g. warning letters addressed to distributors or resellers; dissemination of messages to denounce the alleged infringement and so on)”.

However, the Court also highlighted that in this case a similar situation did not occur, given that Mylan had proceeded to market its drug during the first instance preliminary proceedings, “thus proving in practice that in fact no actual immediate conditioning of its business decisions had arisen out of the counterparties’ conduct”, and that “the outcome of the interim proceedings would not in any way influence its business decisions”. On the other hand, Mylan had not invoked other grounds for the danger in delay, “such as, for example, counterparties’ conduct aimed at hindering the marketing of the applicant’s products by the distributors, or at spreading alarm in the market for the presence of Mylan Rivastigmine or at publicly denouncing the alleged infringement and so on”. Hence, the proven absence of such a requirement and the rejection of Mylan’s appeal.