Rapid-fire Neurim – Enough to keep you awake at night

This week saw some rapid-fire developments in the epic Neurim v Mylan battle about Neurim’s Circadin product for insomnia. Difficult to sleep through if you are a patent litigator interested in the life sciences.

On Monday, Marcus Smith J’s latest judgment was released. This followed his provisional judgment on the papers (see Neurim’s success #2). The judgment confirmed that Neurim’s divisional patent was valid and infringed with permission to appeal the “lay-patient argument” refused. 

Thus, Marcus Smith J ordered a final injunction against Mylan, (potentially) removing it from the market. Mylan applied for a stay of the injunction pending an application to the Court of Appeal but, save for a short period to make arrangements to comply with the injunction, this was refused. Mylan had to exit the market by 10 March (a short oral judgment having been given on 4 March with detailed reasons to follow).

On Tuesday a judgment was handed down by the Court of Appeal showing that, in a short period of time, Mylan had turned things around considerably. 

On 8 March an urgent application by Mylan sought permission to appeal Marcus Smith J’s validity decision and a stay of the final injunction. Arnold LJ directed, on 9 March, the application should be heard on 16 March and stayed the injunction until the conclusion of the hearing (or 4pm if later). 

On 16 March Mylan had a good day.

The Court of Appeal has granted permission to appeal the lay-patient argument (which is all that Mylan had wanted from the trial of preliminary issues; see Neurim v Mylan: on and on it goes) and expedited the appeal (the parties were agreed on this) so that the appeal will be heard in the week beginning 16 or 23 May 2022 (just under 3 months before the patent expires).

Further, Mylan has obtained a stay of Marcus Smith J’s final injunction pending determination of the appeal. In essence, the Court of Appeal has decided that it is most important to maintain the status quo, which the evidence shows is a relatively stable duopoly. Three points are of interest regarding the stay:

• The three judges (Newey LJ , Arnold LJ and Birss LJ) differed regarding whether Neurim would be adequately compensated in damages if Marcus Smith J’s decision (and thus the injunction) was upheld on appeal. Arnold LJ thought they were but Birss LJ and Newey LJ were not convinced;
• Mylan will also be permitted to argue at the hearing of the appeal that the injunction should also be stayed pending the determination of its opposition at the EPO. This would leave it on the market until expiry of Neurim’s patent; and finally
• Teva (which may or may not be on the market with its own generic product) is the subject of an application for an interim injunction (it is understood that this is to be heard on or shortly after 8 April). The judgment of Arnold LJ (see [30]) indicates that the analysis for Teva may well be very different.

Finally, also released on Tuesday, was the Court of Appeal’s judgment in an appeal relating to the first Neurim v Mylan proceedings (on the parent patent). The live issues on this appeal (the parent patent having been revoked by the EPO) were:

1. the status of Neurim’s licensee, Flynn Pharma, which Marcus Smith J had held was not an exclusive licensee, and thus had no standing to sue for infringement; and
2. the costs order made after the parent patent had been revoked by the EPO (awarding Mylan the bulk of its costs despite its loss in the UK – see Going out with a Bang, what a difference 2 days makes).

The Court of Appeal has overturned Marcus Smith J on both, finding that Flynn is an exclusive licensee and that the appropriate costs position in the circumstances was for there to be no order i.e. the parties bear their own costs.

For those preparing or reviewing exclusive licences this judgment holds that a clause that regulates the way any enforcement proceedings would be run as between patentee and licensee does not destroy its exclusive nature. This is so even when it might be said the clause virtually removes the licensee’s autonomy. It also affirms the Marcus Smith J ruling (and other prior case law including Spring Form) that a licence to part of a claim is still exclusive for that field of use (although Arnold LJ left open a possibility that some slices might be too small).

We will follow-up with more detailed analysis of these judgments.