High requirements for ex parte injunctions under the Patent Act

Recently, Setterwalls successfully represented a pharmaceutical company in an appeal against an interim injunction issued by the Patent and Market Court without hearing the client company, i.e. a so-called ex parte injunction. The Patent and Market Court of Appeal upheld the appeal and confirmed by its reasoning for decision that there are very high requirements for ex parte injunctions to be issued in the event of alleged patent infringements.

The patent holder filed a lawsuit on July 19, 2022, bringing, among other things, a motion for an interim injunction due to alleged infringement of a patent regarding a dosing regimen for an MS drug. The Patent and Market Court (PMC) issued a subpoena and ordered the opposing party to file a defence within two weeks of service.

On July 25, 2022, the patent holder supplemented their action with a motion for the interim injunction to be issued without hearing the opposing party, i.e. ex parte.

On July 29, 2022, the defendant confirmed that the subpoena had been received. Later that day, PMC granted the patentee’s motion and issued an interim injunction without hearing the opposing party. The injunction went into effect immediately. PMC stated in its reasons for the decision that it was likely that the patent was valid and that the alleged infringement product infringed the patent. As a reason for issuing the injunction without hearing the opposing party, the PMC stated that the opposing party delayed in confirming receipt of the subpoena even though the opposing party should have been aware that the patent holder was planning to file the action, that it was likely that the patent holder would lose basically all of its sales from August 1, 2022, if the alleged infringement product remained on the market,  and that, on the grounds that the counterparty was a start-up company with an unclear financial position, it was uncertain whether the counterparty would be able to compensate the patent holder’s damage if no injunction was issued.

Setterwalls appealed PMC’s decision to the Patent and Market Court of Appeal (PMCA) with a request that PMCA should immediately decide that the injunction should be suspended until further notice (so-called inhibition) and that PMCA should overturn PMC’s decision. PMCA upheld the suspension claim and then decided – after the patent holder had been heard – to overturn the PMC’s decision.  PMCA’s decision is final and may not be appealed.

In the grounds of the decision, PMCA stated at the outset that in a case concerning sequestration (NJA 2005 p. 29), the Supreme Court had held that there must be a substantial reason for making a decision without hearing the other party and that above all the degree of urgency is of great importance. PMCA noted that the same starting points apply in relation to decisions on interim ex parte injunctions under the Patent Act and that, with reference to the EU Sanctions Directive, it is of particular importance whether a delay can cause irreparable damage.

Regarding the circumstances of the present case, PMCA noted that the actions of the patent holder indicated that the degree of urgency was not very high. PMCA further held that the circumstances that the respondent delayed in confirming receipt of the subpoena, that the respondent had taken further launch preparations in the interim, and that the respondent’s financial situation was unclear neither individually nor together could justify an exception to the general rule that the opposing party should be heard before making a decision.

If PMC’s ex parte decision had been upheld by PMCA, this could have had significant consequences for the strategies of patent holders and alleged infringers in connection with product launches. In particular, it is conceivable that it would have become much more common for companies to bring nullity actions well in advance of product launches, in order to limit the risk of ex parte injunctions. This, in turn, would have meant that many patent disputes that are currently settled out of court or that for other reasons never lead to court disputes, would have had to be brought before PMC.

The PMCA’s decision to lift the ex parte injunction confirms that the legal position has not changed on this point and that there continues to be very high requirements for interim injunctions to be imposed without hearing the other party. We therefore believe that ex parte injunctions will continue to be very rare in patent law in the future.

(See PMÖD’s decision of 5 August 2022 in Case No PMÖ 9563-22)