ABBOTT GMBH & CO KG AND ANOTHER v. PHARMAREG CONSULTING CO LTD AND ANOTHER

HCA166/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 166 OF 2009

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  REASONS  FOR  JUDGMENT

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1. The plaintiffs' claims in this action are for injunctive relief, an enquiry as to damages or an account of profits and consequential orders in respect of the infringement by the 1^st and 2^nd defendants of the 1^st plaintiff's Hong Kong Standard Patent No. HK1006002 (“the Hong Kong patent”).

2. By an inter partes summons dated 20 January 2009 (“the summons”) the plaintiffs applied for an interlocutory injunction and orders for delivery up and discovery.  At the hearing before Deputy Judge Au on 23 January 2009 the judge granted an interim injunction until the substantive hearing of the summons whereby the 1^st and 2^nd defendants were restrained from :

“(a)  manufacturing, putting on the market, using or importing:-

(1)  the pharmaceutical product “OBIRAX-10 CAP 10 MG”;

(2)  the pharmaceutical product “OBIRAX-15 CAP 15 MG”;

(3)  any  other medicament  for  the treatment of obesity manufactured using the chemical compound N,N-dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine hydrochloride; and/or

(4)  any  other  medicament  for  the treatment of obesity manufactured using the chemical compound N,N-dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine hydrochloride monohydrate (collectively referred to as the “Infringing Products”);

(b)  stocking any Infringing Products in Hong Kong, whether for the purpose of putting them on the market (in Hong Kong or elsewhere) or otherwise; and/or

(c)  causing, enabling or assisting others to do any of the aforesaid acts.”

3. The judge also gave directions for the filing of evidence.

4. The summons came before me for hearing on 5 March 2009.  The hearing was adjourned part heard until 27 March 2009 as the parties had underestimated the time required for the substantive hearing of the summons.  The interim injunction was continued until the adjourned hearing.

5. On 27 March 2009 after hearing arguments I made an order in the terms of the interim injunction until 21 November 2009 or until further order.  I also made an order for delivery up and discovery in the terms of paragraphs 2 and 3 of the summons.  I also ordered that the costs of the application be the plaintiffs' costs in the cause.

6. I indicated at the time that reasons in writing would be given later.  I now do so.

Background

7. The 1^st plaintiff is a corporation incorporated in Germany.  The 2^nd plaintiff is a company incorporated in Hong Kong.  Both plaintiffs are associated companies and are beneficially owned by Abbot Laboratories.  The Abbott Group of companies is a leading pharmaceutical group.

8. The  1^st plaintiff  is the  registered  owner of  the Hong  Kong patent which claims the use of a chemical compound N,N-dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine hydrochloride or  N,N-dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine hydrochloride monohydrate in the manufacture of medicaments for the treatment of obesity.  The chemical compounds are commonly referred to as Sibutramine.

9. The 2^nd plaintiff has been granted an exclusive licence by the 1^st plaintiff for the use in Hong Kong of the Hong Kong patent.

10. In 2001 Abbott Laboratories acquired the pharmaceutical business of BASF Group which included the global operations of Knoll Pharmaceutical Company (“Knoll”).  The acquisition of Knoll enabled Abbott Laboratories to, inter alia, acquire rights to Knoll's orally administered anti-obesity drug which was marketed in the USA as MERIDIA and in Asia as REDUCTIL and to rights to various worldwide patents including the Hong Kong patent.

11. The active ingredient in MERIDIA and REDUCTIL is Sibutramine.

12. MERIDIA and REDUCTIL have been produced and marketed in capsules containing 10 mg or 15 mg of Sibutramine.

13. On the evidence before me it is clear that MERIDIA and REDUCTIL have been successfully marketed and sold.  On the undisputed evidence approximately 14 million patients worldwide have used Sibutramine for the treatment of obesity since it was approved by the Food and Drug Administration of the Government of the USA since 1997.  Approval by health authorities in various other jurisdictions including Canada and Australia have also been obtained for the use of MERIDIA and REDUCTIL for the treatment of obesity.

14. After acquiring Knoll, the 2^nd plaintiff has spent extensive efforts in promoting REDUCTIL in Hong Kong to healthcare and medical professionals including doctors and hospitals and also to the retail market including pharmacies and consumers.  On the undisputed evidence from 2002 to 2008 the 2^nd plaintiff has spent substantial amounts towards marketing and promoting REDUCTIL in Hong Kong from about US$234,000 in 2002 to US$1,507,000 in 2008.

15. The extensive marketing of REDUCTIL has resulted in substantial growth in sales from US$2,706,000 in 2002 to US$6,433,000 in 2008.  REDUCTIL sales account for roughly 40% of the 2^nd plaintiff's total sales revenue in Hong Kong.  REDUCTIL is the 2^nd plaintiff's best selling drug in Hong Kong. 

16. The 1^st defendant is a company incorporated in Hong Kong with limited liability.  It has an issued and paid-up capital of HK$400.  It is a medical consulting company providing consulting services to small and medium sized pharmaceutical and health care companies.

17. The 2^nd defendant is a company incorporated in Hong Kong with limited liability.  It has an issued and paid up capital of HK$10,000.  The 2^nd defendant carries on business in, inter alia, the trading of pharmaceutical products.

18. The plaintiffs' case is that the defendants have infringed the Hong Kong patent by, without the consent or authorization of the plaintiffs and pursuant to a common design with Micro Labs Limited (“Micro”) of India the manufacturer of the pharmaceutical products OBIRAX-10 Cap 10 mg and OBIRAX-15 Cap 15 mg (collectively referred to as “OBIRAX”) the 1^st and 2^nd defendants have imported, put on the market and stocked OBIRAX which are products obtained by the process referred to in claims 1 and/or 2 of the Hong Kong patent.

Prospects of success at trial

19. It was submitted on behalf of the defendants that the plaintiffs have failed to show a high likelihood of success at trial and that being so, the interlocutory injunction sought should be refused.  The Hong Kong patent is due to expire on 21 November 2009 and it is unlikely that the action will be tried before then.  In the circumstances it was submitted on behalf of the defendants that the plaintiffs should satisfy the court that they had a high likelihood of success at trial.

20. The defendants relied on the statement at para 29/1/18 in the Hong Kong Civil Procedure 2009 that where the granting of an injunction would effectively dispose of the entire action, the plaintiff had to show “at least a high likelihood of success at trial”.

21. Mr. Yan SC, for the plaintiff, submitted, rightly in my view, that the cases cited do not support that proposition. 

22. In Lansing Linde Ltd v Kerr [1991] 1 WLR 251, a restraint of trade case, it was held that in determining whether or not, on the balance of convenience, to grant an injunction the judge had properly taken account of the plaintiff's prospects of success at trial having regard to the fact that it would not be possible to hold a trial before the period for which the plaintiff claimed to be entitled to an injunction had expired or substantially expired.  It was not enough to decide merely that there was a serious issue to be tried.

23. Staughton LJ said at page 258:

“ If it will not be possible to hold a trial before the period for which the plaintiff claims to be entitled to an injunction has expired, or substantially expired, it seems to me that justice requires some consideration as to whether the plaintiff would be likely to succeed at a trial.”  (emphasis provided)

24. Staughton LJ did not say that the plaintiff would have to show at least a high likelihood of success.  All that is required is “some consideration” as to whether the plaintiff would be likely to succeed at trial.

25. And in Fortune Realty Company Ltd v Chan Hiu Yeung Dick (HCA 1582/2001, 24 May 2001) another restraint of trade case, Chu J accepted that where the period of restraint will have expired before the action is tried, the granting or refusal of the interlocutory injunction will effectively dispose of the action in that it is very probable that the parties may not proceed further with the case after the interlocutory stage.  In such circumstances it is proper to have regard to the prospects of the plaintiff succeeding in the action.  She went on to say at page 4 of her reasons for decision:

“ But it is to be noted that the court is not to embark upon a mini-trial on the affidavits.  All that is required is “some assessment” of the plaintiff's prospects of success and it is for the judge to control the extent of such assessment: Lansing Linde Ltd v Kerr at p.258c.”

26. However, in Fast-Link Express Ltd v Falcon Express Ltd (HCA 2040/2005; 30 December 2005, Deputy Judge Carlson), a passing off case, the judge was of the view that the effect of the injunction would be the end of the matter and that in such circumstances the plaintiff would need to show “it is at least very likely to succeed at trial”.

27. It is accepted that the plaintiffs would need to show more than merely a serious question to be tried as the Hong Kong patent is due to expire on 21 November 2009 and it is unlikely that the trial will take place before then.  It seems to me that it is proper to have regard to the plaintiffs' prospects of success at trial.  In my view, the plaintiffs must show that it has at least good prospects of success at trial.  I am satisfied that they have shown more than that in this case.  Having heard the arguments, the plaintiffs have satisfied me that they have very good prospects of success at trial.  It is highly likely that they will succeed at trial.

28. Before pharmaceutical products for the treatment of a disease can be sold, offered for sale, distributed or possessed for the purpose of sale, the products must be registered with the Department of Health (“DOH”).

29. The 1^st defendant registered with the DOH the pharmaceutical product OBIRAX, the active ingredient of which is Sibutramine.

30. Lin Kim Fung (“Lin”) of the 1^st defendant admits at paragraph 7 of his affirmation that the 1^st defendant applied to register OBIRAX with the DOH in its capacity as an authorized local agent of the manufacturer Micro.  He says that in late 2005 the 1^st defendant was instructed to secure Hong Kong registrations for OBIRAX and had received relevant information, reports and data about OBIRAX from Micro.  It is undisputed that the active ingredient in OBIRAX is Sibutramine.

31. Lin also says that in the application for registration of OBIRAX with the DOH he stated that OBIRAX was for weight management.

32. It is clear that importers of pharmaceutical products must apply for and obtain an import licence prior to the importation of pharmaceutical products into Hong Kong.  The import licensing requirements require an applicant of an import licence to be the registrant of the pharmaceutical product or a party that has written authorization from the registrant.  The 1^st defendant is the registrant.  The evidence shows clearly that OBIRAX has been imported into Hong Kong.  Although in the evidence filed on behalf of the 1^st defendant there is no admission that it was the importer or provided its written authorization to the importer of OBIRAX, it seems to me that the 1^st defendant must have been either the importer or has provided its written authorization to the importer. 

33. The 2^nd defendant has clearly been distributing and selling ORIBAX in Hong Kong as Lau Wai Chung (“Lau”) a director of the 2^nd defendant has admitted in his affirmation.

34. On the evidence it seems to me also that the 1^st and 2^nd defendants are closely related companies.  Lau is one of the two founding shareholders and directors of the 2^nd defendant.  He is also one of the three shareholders of the 1^st defendant.  In documents filed by or on behalf of the 2^nd defendant with the Companies Registry, Lau's e-mail address is linked to the 1^st defendant's website address.

Validity of the patent

35. What is claimed in the Hong Kong patent is the use of Sibutramine in the manufacture of a medicament for the treatment of obesity (claims 1 and 2).  The claim is the use of a known compound Sibutramine for the treatment of obesity a disease which it was not previously known could be treated using this compound.  This is commonly referred to as a Swiss-type claim.

36. Mr. Wong, for the 1^st defendant, submitted that there were doubts in the validity of the Hong Kong patent and the plaintiffs' case on infringement of the same.  Mr. Lo, for the 2^nd defendant, adopted the same arguments.

37. Mr. Wong drew my attention to dicta of Jacob J (as he then was) at first instance in Bristol-Myers Squibb Co v Baker Norton Pharmaceuticals Inc [1999] RPC 253 at 271-272 where he discussed difficulties with the requirement of novelty in Swiss-type claims.  Be that as it may, it is clear that, as Mr. Yan SC, rightly submitted, the Court of Appeal in that same case Bristol Myers [2001] RPC 1 held, inter alia, that the second-medical use in Swiss-type claims must be for an end-purpose distinctively different from the first, albeit also medical purpose for which the substance was used.  The novelty must lie, not in the method of use, but in the new therapeutic purpose for which the substance was used.  The Court of Appeal followed John Wyeth & Brothers Ltd's Application [1985] RPC 545.

38. Having set out the relevant part of the judgment of Falconer J in Wyeth, it is stated at paragraph 2-19 Terrell on the Law of Patents 16 Edn. :

“ As the law stands, therefore, second medical use claims can be obtained providing they are drafted appropriately.  However, it is necessary that the claim should, on a proper examination, be for a second medical use and not be for a mere discovery about an old use.”

39. As the treatment of obesity was a new medical use of Sibutramine, there does not seem to me to be any real doubt about the validity of the Hong Kong patent.  In my view, there is no merit in the defendants' submission.

Infringement

40. It was also submitted on behalf of the defendants that the plaintiffs had difficulties in establishing infringement of the Hong Kong patent.  I was referred to dicta of Lord Hoffmann in Merrel Dow Pharmaceuticals Inc and another v H. N. Norton & Co. Ltd. [1996] RPC 76 at 92 where he said :

“Liability for infringement is, as I have said, absolute.  It depends upon whether the act in question falls within the claims and pays no attention to the alleged infringer's state of mind.  But this doctrine may be difficult to apply to a patent for the use of a known substance in a known way for a new purpose.  How does one tell whether the person putting the additive into his engine is legitimately using it to inhibit rust or infringing by using it to reduce friction?”

41. It was submitted that on the evidence neither the 1^st nor the 2^nd defendant intended to use OBIRAX for the treatment of obesity as they only intended to use it for weight management and that the plaintiffs were unable to show that they had infringed the patent.

42. It seems to me that the defendants have taken the dicta of Lord Hoffman out of context.  His Lordship was not there discussing a Swiss-type claim at all and he was not talking about difficulties with a Swiss-type claim.  He was discussing claims which have been described as MOBIL-type claims.  As is stated at paragraph 8-11 of Terrell in view of the dicta of Lord Hoffman in Merrell Dow it remains to be seen whether the principle of absolute liability of MOBIL-type claims will be compromised.  This comment, however, has no application to Swiss-type claims.

43. As is stated at paragraph 8-08 of Terrell it is and always has been the law in relation to direct infringement that the knowledge or intention of the infringer is irrelevant, save for the exceptions mentioned at paragraph 8-09 which do not apply here.

44. The question to consider is whether the defendants have infringed the patent.

45. As is stated in the World Health Organization fact sheet for September 2006, overweight and obese are defined as abnormal or excessive fat accumulation that may impair health.  Body mass index (“BMI”) is a simple index of weight-for-height used commonly for classifying overweight and obesity in adults.  It is defined as the weight in kilograms divided by the square of the height in meters (kg/m²).  The World Health Organization defines “overweight” as a BMI equal to or more than 25 and “obesity” as a BMI equal to or more than 30.

46. The defendants submitted that OBIRAX was registered for weight management and not for the treatment of obesity.  They draw a distinction between 'weight management' on the one hand and 'obesity' on the other hand.  It was submitted that as OBIRAX was registered for weight management and not for the treatment of obesity there was no infringement on the part of the defendants.

47. On the different views of Lin and Lau on the one hand and Professor James on the other hand, I much prefer the views of Professor James to those of Lin and Lau.

48. Both Lin and Lau qualified as pharmacists only in 1998 well after the application in 1989 of the European patent on which the Hong Kong patent was granted.  Professor James has an extensive and most impressive curriculum vitae.  He is one of the world's leading experts on obesity.  He currently holds the position of Director of Public Health Policy Unit/Chairman of the International Obesity Taskforce and the President-Elect of the International Association for the Study of Obesity.

49. Professor James, who was instrumental in early studies of obesity and its treatment, says that weight management per se was considered to be the critical issue in the treatment of obesity and this was clearly recognized in the late 1980s.  The most direct evidence of this concept came from a study in which he was the principal investigator in trials in Europe known as the STORM trial i.e. Sibutramine Trial of Obesity Reduction and Maintenance.  The STORM trial specifically assessed how to help maintain weight loss over the long term and therefore, to better manage the weight problem of obese patients.  As a result of the trial regulatory authorities then agreed to the use of Sibutramine in the longer term management of the weight problem in obese patients but did not allow its indefinite use in the absence of very long term studies.

50. I would also observe that from the description in the patent specification of the European patent on which the Hong Kong patent was granted it is stated that from the trial results mentioned therein subjects treated with Sibutramine experienced a significant weight loss over the six week period of each trial when compared to subjects treated with a placebo.

51. I am unable to accept the submission made on behalf of the defendants that persons skilled in the art are most likely to understand weight management as a totally distinct concept from the treatment of obesity.  This, as Professor James rightly said, is a spurious distinction.

52. In my view the defendants' reliance on the letter dated 15 December 2008 from the DOH to an enquiry made by Spark Rainbow Ltd is misplaced.  In that letter the DOH said, inter alia :

“Sibutramine is used for the treatment of obesity and management of body weight if other risk factors such as diabetes mellitus or hyperlipidaemias are present.”

53. As Professor James said the DOH was simply specifying that Sibutramine was used for patients with BMIs of 30 and above as well as some patients with BMIs between 27 and 30 if they had an additional risk factor.  Professor James said that in so doing the DOH were following international regulatory convention when they gave permission for Sibutramine to be used in obesity treatment but also specified that patients with BMIs not only above 30 but also those with BMIs from 27 to 30 if they had an additional risk factor were eligible for treatment.  The additional term of 'weight management' applied to the second group of patients who were not obese and this complied with international convention to allow patients with BMIs of 27 or more to be considered for treatment if they had an additional risk factor.

54. As a person skilled in the art at the time of the application in 1989 of the European patent on which the grant of the Hong Kong patent was granted, Professor James says that in 1989 in the treatment of obesity, the problem was increasingly being recognized as one of trying to maintain patients' weight once they had lost weight so the term 'weight management' was increasingly used in practice.  When it came to regulatory approval of Sibutramine and other drugs to improve the management of patients who were overweight or obese, the regulatory authorities in their approval wanted to allow those with BMIs below 30 to be treated with Sibutramine provided they had additional risk factors.

55. In my view it is clear that the use of Sibutramine to treat obesity and weight management are not two distinct forms of use or treatment.  As Professor James said, in the late 1980s it was understood that the treatment of obesity included both the management of a patient's dietary and exercise behaviour and by advising them to take in addition approved pharmacotherapy to help with weight management.  Thus the treatment of obesity would also encompass weight management.  There can be no doubt, in my view, that the treatment of obesity does include weight management.

56. I see no merit in the defendants' submission.

57. Section 73(1) of the Patents Ordinance Cap 514 provides that :

“ A patent while it is in force shall confer on its proprietor the right to prevent all third parties not having his consent from doing in Hong Kong all or any of the following-

(a)  …………………………………………………………

(b)    in relation to any process which is the subject-matter of the patent-

(i) using the process; or

(ii)   …………………………………………………………

(c) where the invention is a process, then in relation to any product obtained directly by means of that process-

(i) putting on the market, using or importing the product; or

(ii)   stocking the product, whether for the purpose of putting it on the market (in Hong Kong or elsewhere) or otherwise.”

58. Thus it is clear that where the invention is a process then in relation to any product obtained directly by means of that process it is an infringement to put on the market, use or import or stock the product.  No distinction is drawn by subsection (c) between a process used in Hong Kong and one used abroad (paragraph 8-28 Terrell).

59. The clear evidence is that OBIRAX was produced by the manufacturer Micro in India.  This is not disputed.  I am satisfied that Micro has used the process in the manufacture of OBIRAX.  Although there is no insert in the OBIRAX packaging to show what it is used for, there can be no doubt that on Micro's own website Micro claims that the active ingredient in OBIRAX is Sibutramine and that OBIRAX is an anti-obesity drug.  Thus Micro acknowledges that it has used Sibutramine in the manufacture of OBIRAX for the treatment of obesity which falls within the claims of the Hong Kong patent.  Clearly, the process has been used.

60. Once it is shown that the process has been used it is necessary to decide whether the acts alleged to be done by the defendants were of such a nature that they fell within the statutory definition of infringement.  (paragraph 8-04 Terrell).

61. In my view the plaintiffs have clearly shown that the defendants have put on the market and stocked OBIRAX in Hong Kong.  On the undisputed evidence, after the grant of the interim injunction by Deputy Judge Au on 23 January 2009 someone representing the 1^st defendant offered to deliver up its existing stock of about 100,000 OBIRAX tablets to the 2^nd plaintiff.  It was also conceded by Mr. Wong at the resumed hearing before me that the 1^st defendant is in possession of about 100,000 tablets of OBIRAX.  The 1^st defendant must have stocked the same. 

62. In my view infringement is clearly established against the 1^st defendant. 

63. As regards the 2^nd defendant, Lau has admitted that the 2^nd defendant has distributed OBIRAX to local pharmacies.  As it has put OBIRAX on the market, infringement is also clearly established against the 2^nd defendant.

64. The plaintiffs have satisfied me that it is highly likely that they will succeed in establishing at trial that the 1^st and 2^nd defendants have infringed the Hong Kong patent. 

65. I am also satisfied that it is highly likely that the plaintiffs will succeed in establishing at trial that the importation, putting on the market and stocking OBIRAX in Hong Kong by the 1^st and 2^nd defendants was pursuant to a common design with Micro.  Lin has admitted that the 1^st defendant applied to register OBIRAX with the DOH in its capacity as an authorised local agent of Micro.  And, as I have said, the 1^st and 2^nd defendants are closely related companies.

Balance of convenience

66. The plaintiffs' case is that damages would not be an adequate remedy and that if an interlocutory injunction were not granted the nature of the damage sustained is such that it cannot be assessed in money terms.  It was also submitted that even if damages were an adequate remedy the defendants would not be in a financial position to pay the plaintiffs any damages.

67. It is important to bear in mind that the Hong Kong patent will expire on 21 November 2009.

68. As REDUCTIL has been successfully marketed and sold in Hong Kong I am satisfied that the continued importation and sale of OBIRAX will severely impact on the sales of REDUCTIL in Hong Kong which, on the evidence, is the 2^nd plaintiff's best selling drug in Hong Kong. 

69. As is set out in the first affirmation of Amy Lee, OBIRAX was at first not being openly distributed to the general public but was being marketed and sold in a secretive and careful manner without sales invoices and product inserts.  It was only after she had received a report on 30 September 2008 that a consumer, a Ms So, had contacted the 2^nd plaintiff's REDUCTIL hotline to make enquiries about a package of OBIRAX capsules that she learnt that the consumer had been supplied by a local pharmacy with OBIRAX when in fact her doctor had prescribed REDUCTIL.  According to Ms So the pharmacy had claimed that OBIRAX was a “hospital version” of REDUCTIL.  This led the 2^nd plaintiff to make further investigations and evidence was obtained from a local pharmacy of an invoice issued by the 2^nd defendant evidencing the sale by it of OBIRAX to that local pharmacy.

70. The 2^nd plaintiff thus became concerned that the sale and distribution of OBIRAX had spread from being surreptitiously supplied to certain healthcare professionals to being openly sold by pharmacies in Hong Kong and even being passed off as 'the hospital version' of REDUCTIL.  This led the 2^nd plaintiff to commission a market survey, which was conducted in November 2008, to find out whether pharmacies were promoting and offering generic products to patients seeking REDUCTIL and to gather information on the sale of generic Sibutramine products by pharmacies.

71. The results of the survey are set out in the affirmation of Lee Chun Hong (“Lee”) of the 2^nd plaintiff.  They show that the plaintiffs' concerns that OBIRAX was being extensively distributed in Hong Kong to be well founded and that OBIRAX was being sold at prices substantially less than REDUCTIL.

72. Lee estimates the potential loss of sales of REDUCTIL caused by OBIRAX to be in the region of US$1.36 million in the year 2009.  Even taking into account that the Hong Kong patent will expire on 21 November 2009, the potential loss of sales is still substantial.  The potential loss of sales has been estimated and is thus calculable as damages.  However, on the evidence before me the defendants are not in a financial position to pay any damages let alone substantial damages.  The 1^st plaintiff has an issued and paid up capital of HK$400 and the 2^nd defendant had an issued and paid up capital of HK$10,000.  The defendants have not provided any evidence of their financial position.  Thus in my view realistically damages would not provide an adequate remedy to the plaintiffs as the defendants are not in a financial position to pay them.

73. It is also important to bear in mind that a defendant should not pre-empt the expiry of a patent and thereby acquire a valuable commercial bridgehead.  No lesser protection should be afforded to a claimant where a patent is reaching the end of its term (paragraph 12-59 Terrell).

74. In Corruplast Ltd v George Harrison (Agencies ) Ltd [1978] RPC 761 it was held, inter alia, that during the residue of the life of the patent which was about to expire, it would not be right that the defendants should be allowed to build up a business and create a bridgehead to enable them to start off from the position of an established business rather than that of a new competitor just coming on the market.

75. I am also satisfied that in addition to directly hurting the plaintiffs' sales of REDUCTIL before the expiry of the Hong Kong patent the sales of OBIRAX have also impacted upon the plaintiffs' business plans for the sale and marketing of Sibutramine based products in Hong Kong.  Damages would not be an adequate remedy for this loss.

76. As Amy Lee explains, upon the expiration of a patent for well-known drugs, manufacturers and distributors launch their generic equivalent of the drug which are much cheaper than the patented drug.  To meet competition posed by the generic equivalents it is often the practice of pharmaceuticals like the Abbott Group to launch lower-priced equivalents of successful drugs which have enjoyed patent protection upon the expiry of the patent.  Such lower-priced versions are usually launched about six months prior to expiry of the patent to enable the lower-priced version to establish a foothold in the market.  The plaintiffs' lower-priced version of REDUCTIL is SIBUTIL which the plaintiffs had originally planned to launch sometime in 2009 prior to the expiration of the Hong Kong patent.  However, the plaintiffs have been compelled to bring forward the launch and sale of SIBUTIL in Hong Kong to mid-2008 in order to combat the sales of OBIRAX.  I am satisfied that, as Amy Lee says, each sale of SIBUTIL represents a loss of revenue that the plaintiffs could have made by selling its higher priced REDUCTIL.  I am satisfied that unless the defendants are restrained they will be able to build up a position of strength in the market during the remaining term of the Hong Kong patent to compete against the plaintiffs when the patent expires.  The damage suffered by the plaintiffs as a result of letting the defendants on the market prematurely would be incapable of assessment.  (per Eichelbaum J, as he then was, in Monsanto Company v Stauffer Chemical Company [1984] FSR 559 at 569)

77. The damage to the plaintiffs is, in my view, incapable of assessment and damages would not be an adequate remedy.

78. On the other hand, it seems to me that the defendants are well protected by the plaintiffs' cross-undertaking in damages.  Although it was submitted that the 1^st defendant enjoys a good reputation built up in a short time, I fail to see how the interlocutory injunction would cause irreparable damage to its reputation.  The defendants would simply be delayed in distributing and selling OBIRAX until after the expiry of the Hong Kong patent and damages would, in my view, be an adequate remedy if the defendants should succeed at trial.  The plaintiffs are in a position to pay any damages to the defendants.

79. I would also observe that after the grant of the interim injunction by the judge on 23 January 2009 the 1^st defendant was prepared to deliver up its existing stock of OBIRAX even though there was no order at that time for delivery up.  I fail to see how an interlocutory injunction would cause the 1^st defendant irreparable damage if it voluntarily offered to deliver up its stock after the hearing on 23 January 2009.

80. It was also submitted on behalf of the defendants that because of undue delay in applying for the interlocutory injunction the court should not grant the interlocutory injunction.

81. The defendants relied on King Fung Vacuum Ltd v Toto Toys Ltd [2006] 2 HKLRD 785 and Wong Chung Ming Development Co. Ltd v Profit Surplus Ltd (CACV 239/2008; 10 February 2009).  In King Fung there was no explanation for the delay and Rogers VP said at paragraph 20 of his judgment :

“ There has traditionally been a strong requirement when interlocutory injunctions have been sought, that the plaintiff must show that it has acted promptly and without delay.  Promptly in the circumstances of interlocutory injunctions has been commonly understood to be a period of six weeks or so of unexplained delay and three months with an explanation given for the delay in making application for an injunction.  Since the American Cyanamid decision the importance of irreparable damage in an application for an interlocutory injunction is paramount.  If there is no irreparable damage demonstrated then the need for an interlocutory injunction has not been shown.  This is important because of the approach that the courts take to interlocutory injunctions.  They are not the trial of the action and the court is concerned with whether irreparable damage will occur before a trial can take place.  It stands to reason that if a party is prepared to allow matters to proceed and (takes no action) with respect to matters which have been extant for lengthy periods, it lies ill in their mouth to say that there is likely to be irreparable damage and that is the case here.” 

82. And in Wong Chung Ming when dealing with delay, Le Pichon JA said at paragraph 30 of her reasons for judgment :

“The question of delay is relevant when considering the question of irreparable damage because a party seeking an injunction is unlikely to stand by for any period of time if the party against whom the injunction is sought is truly causing serious and irreparable damage.  Delay in seeking relief may also cause prejudice to a party against whom the injunction is sought because that party may have altered its position in the intervening period and be prejudiced by reason of the delay.”

83. Thus the question of delay is relevant in considering whether there is likely to be irreparable damage to the plaintiff if no interlocutory injunction were granted and also whether it has caused prejudice to the defendant because it has altered its position in the intervening period.

84. As I have said I am satisfied that if no interlocutory injunction were granted there is likely to be irreparable damage to the plaintiffs.

85. The period of delay complained of by the defendants is from April 2007 to September 2008.  It was conceded on behalf of the defendants at the hearing before the judge on 23 January 2009 that the defendants were not complaining of delay after September 2008.

86. In August 2006 the plaintiffs learnt that the 1^st defendant had registered OBIRAX.  As there was no evidence that it had commenced dealing with OBIRAX, they wrote to the 1^st defendant to remind it of the Hong Kong patent.  In about July 2006 a few companies had registered with the DOH pharmaceutical products the active ingredient of which was Sibutramine.  Apart from the 1^st defendant, the 2^nd plaintiff wrote also to the other companies to remind them of the Hong Kong patent.

87. In April 2007 the 2^nd plaintiff wrote again to the registrants of pharmaceutical products containing Sibutramine including the 1^st defendant to remind them of the Hong Kong patent and to inform them that the generic Sibutramine products namely, OKA-SIBUTRAMINE were de-registered in Hong Kong in December 2006.  This was pursuant to the discovery made by the DOH in compliance with a Norwich Pharmacal order obtained by the 1^st plaintiff in September 2006 in relation to OKA-SIBUTRAMINE.

88. It was only in April 2007 that the 2^nd plaintiff obtained a sample of OBIRAX from a doctor in Hong Kong.  On 19 April 2007 the 2^nd plaintiff wrote again to the 1^st defendant demanding that it cease and desist importation, distribution and marketing of OBIRAX. 

89. The 1^st defendant replied through its then solicitors by letter dated 13 June 2007 asking for proof of certain matters.  By letter dated 20 July 2007 further information was provided to the 1^st defendant's solicitors.  And it was also stated, inter alia, that they had evidence from various industry sources showing distribution of OBIRAX by the 1^st defendant.  By letter dated 27 November 2007 the solicitors for the 1^st defendant asked for the identity of the various industry sources.  The 2^nd plaintiff was unable to comply with the request as it had obtained the sample of OBIRAX from the doctor who did not want his identity to be disclosed and further that the doctor had himself obtained the sample from a local party in Hong Kong.  OBIRAX was at that time not being openly distributed to the general public but was being marketed and sold in a secretive manner without any sales invoices and product inserts.

90. It seems to me that at that stage the plaintiffs did not have admissible evidence to obtain an interlocutory injunction against the 1^st defendant.

91. It was only in September 2008 that the 2^nd plaintiff received a report that the consumer Ms So had contacted the 2^nd plaintiff through its hotline complaining that a local pharmacy had supplied her with OBIRAX when in fact her doctor had prescribed REDUCTIL.  The pharmacy had claimed that OBIRAX was the 'hospital version' of REDUCTIL.  It was only after September 2008 that the plaintiffs obtained a copy of an invoice issued by the 2^nd defendant. 

92. No complaint is made of delay after September 2008.  In any event the delay prior to September 2008 does not assist the 2^nd defendant as the plaintiffs did not have any evidence prior to that time of the 2^nd defendant's involvement in OBIRAX.

93. It was also submitted that the 1^st defendant was misled by the delay into believing that the plaintiffs were not serious about taking action against it.  There is, however, no evidence at all to show that the 1^st defendant was misled in any way by the plaintiffs.  There is no evidence that the 1^st defendant has prejudiced its position or has in any way altered its position because of delay.  The evidence shows that all along the plaintiffs have made it clear to the 1^st defendant that they view their patent rights seriously and would take action to stop it from infringing the Hong Kong patent.  That is no merit in the submission that the 1^st defendant was misled or has altered its position because of the delay.

94. I would respectfully adopt what Eichelbaum J said in Monsanto at page 571 :

“Further, and without wishing to detract from the proposition that equitable relief needs to be sought promptly, it is not sufficient for a defendant to show that the applicant has delayed unreasonably.  It must be shown that because of that delay, it would be unreasonable to grant the remedy; that it has become practically unjust to do so.  As Megarry J said in: Legg v Inner London Education Authority [1972] 1 WLR 1245:

'What seems to me important is not so much the length of the delay per se, but whether the delay has in some ways made it unjust to grant the injunction claimed.'  (pp.1259-1260).

And see Lindsay Petroleun Co. v Hurd (1874) L.R.5P.C. 221, 240 and Spry, Equitable Remedies, 2nd Ed., pp. 405, 454-455.”

95. In my view, the delay complained of had not made it unjust to grant the interlocutory injunction.

96. For the above reasons, I made an order in the terms of the interim injunction until 21 November 2009 or until further order.  It was also appropriate to make the delivery up and discovery orders in the terms of paragraphs 2 and 3 of the summons and an order that the costs of the application be the plaintiffs' costs in the cause.