Preliminary injunctions on second generic entry in Germany
23 October 2016
In its judgment 4 c O 46/16 of 14 October 2016, the Regional Court Düsseldorf has explained and further elaborated the principles on which a preliminary injunction in a patent infringement claim may be granted in cases of an imminent generic market entry.
Under German procedural law, there are two essential requirements for the grant of a preliminary injunction. First, there must be a claim for the preliminary injunction. This is basically given if a claim for injunction is given under material law due to a patent infringement. Second, there must be a reason for the preliminary injunction which is also called the “urgency requirement”. This requires beyond the temporal urgency (meaning that the injunction is sought within one month from the knowledge of the infringement) a weighing of interests of the parties. A preliminary injunction will only be granted if the interests of the applicant outweigh the interests of the opponent. One aspect considered in the weighing of interests is the validity of the patent.
The Higher Regional Court of Düsseldorf has established in earlier cases that a preliminary injunction can only be granted if the patent in issue has survived validity attack at first instance: there must be a first instance nullity or opposition decision confirming the validity of the patent. An exception can be made, however, if generic entry is imminent. The potential damage to the patentee in terms of the irreversible price decline caused by generic entry is usually held to outweigh the interests of a generic entrant. The economic investment of the patentee in research and development also counts in the patentee’s favour.
In the judgment Regional Court Düsseldorf 4 c O 46/16, the Regional Court further qualified these principles for cases of second and further generic market entry: the patentee’s interests do not outweigh those of the generic seller if the patentee has previously agreed to the selling of another, namely the first generic product. Under these circumstances it is assumed that the patentee will already have suffered the price decline on first generic entry. Therefore, he will not be granted an injunction to prevent second generic entry. This does however only apply if the patentee has agreed to the generic market entry by a non-affiliated firm. If the first generic seller was an entity affiliated to the patentee, the market is not opened in an uncontrolled manner but the patentee has made a purposeful decision to secure its economic interests in the first generic market entry.
This ruling gives further and clear guidance for the important question when urgency will be assumed in case of generic market entry. It is therefore highly relevant for the strategic decision whether to apply for a preliminary injunction or to start proceedings on the merits in the concerned cases.