Neurim Pharmaceuticals (1991) Limited & Anor. v Generics (UK) Limited & Anor.

When considering a stay of an injunction pending appeal, the court should seek the arrangement most capable of doing justice whatever the appeal’s outcome. It should assess the risk and compensability of each party’s loss, the availability of safeguards and the practical consequences of disturbing the existing position.

Where both parties face a material risk of loss that damages may not fully remedy, preservation of the status quo can be decisive. Permission to appeal requires a real, rather than fanciful, prospect of success. An appeal may be expedited where this is necessary to determine it before the relevant patent expires.

The claimants alleged that the defendants infringed a divisional patent concerning prolonged-release melatonin. Marcus Smith J held that the patent was valid and infringed, rejected the defendants’ lay-patient insufficiency argument and granted an injunction. His final reasons were given in [2022] EWHC 512 (Pat).

The defendants renewed their applications for permission to appeal and for a stay of the injunction. The central questions were whether the proposed appeal had a real prospect of success, whether it should be expedited before the patent expired, and whether the injunction should operate during the intervening two to three months.

1. Permission and expedition. The defendants’ grounds concerning the lay-patient insufficiency argument had a real, rather than fanciful, prospect of success. Permission to appeal was therefore granted. Since the patent would expire on 12 August 2022, the appeal was expedited so that it could be determined before expiry (paras [22]–[23]).

2. Principles governing a stay. The object is to arrange matters so that the appellate court can do justice between the parties whatever the appeal’s outcome. The court should consider whether the claimant would be adequately compensated if a stay were granted and the appeal dismissed, whether the defendant would be adequately protected by a cross-undertaking if the injunction operated and the appeal succeeded, and whether another arrangement could achieve the highest available measure of fairness. The appropriate course depends on the particular facts. The Court followed Novartis AG v Hospira UK Ltd [2013] EWCA Civ 582 and Minnesota Mining and Manufacturing Co v Johnson & Johnson Ltd [1976] RPC 671 (paras [25]–[26]).

3. Comparative risks. Arnold LJ considered the claimants’ lost sales and profits during the short period before the expedited appeal to be readily quantifiable. The evidence did not establish that a stay would cause entry by additional generic suppliers and an unquantifiable downward price spiral. By contrast, removal of the sole incumbent generic supplier would deprive the defendants of their first-mover advantage when the patent expired and make the resulting loss of sales difficult to quantify (paras [27]–[33]).

4. Status quo. Birss LJ and Newey LJ considered that damages might not fully compensate either side, although the risk of uncompensatable loss to the defendants was greater. All three judges regarded preservation of the status quo—under which the defendants had marketed their product since September 2020—as favouring a stay. The requested condition limiting the defendants’ sales lacked evidential justification and could interfere with NHS supply contracts (paras [34]–[38]).

5. The injunction was stayed pending the expedited appeal. The alternative request for a stay pending determination of the European Patent Office opposition was deferred for argument with the substantive appeal (para [36]).

1. Court of Appeal (Civil Division): In [2022] EWCA Civ 370, granted permission to appeal, expedited the appeal and stayed the injunction pending its determination.

2. Patents Court: Marcus Smith J maintained his conclusions that the divisional patent was valid and infringed, rejected the lay-patient argument, refused permission to appeal and granted an injunction. His written reasons were given in [2022] EWHC 512 (Pat), following an earlier paper judgment in [2022] EWHC 272 (Pat).

3. Patents Court preliminary issues: Meade J rejected the claimants’ issue-estoppel case and the defendants’ abuse-of-process case, and directed how the validity trial should proceed: [2022] EWHC 109 (Pat).