The Authors' Take - CJEU rules that repeal of provisional measure does not automatically create liability for wrongful enforcement

CJEU rules that repeal of provisional measure does not automatically create liability for wrongful enforcement

by Léon Dijkman

In its important decision in Bayer Pharma AG v. Richter Gedeon Vegyészeti Gyár Nyrt. and Exeltis Magyarország Gyógyszerkereskedelmi Kft., C-688/17, the Court of Justice of the European Union (CJEU) interpreted Article 9(7) of Directive 2004/48/EC (the Enforcement Directive) to mean that the repeal of provisional measures does not automatically entitle a defendant to damages for wrongful enforcement. 

The case concerned two generic pharmaceutical companies that launched at risk, i.e. entered the market without first invalidating the relevant patent. The patentee, Bayer, requested and obtained provisional measures restraining the generic companies. The patent was subsequently revoked and the generic companies sued Bayer for damages. 

The CJEU found the launch at risk objectively indicative of the existence of a risk of irreparable harm for the patentee, which made the request for provisional measures justified. The mere fact that the patent was later revoked did not, in itself, suffice to make Bayer liable for damages suffered as a result of enforcement of these measures. 

First and foremost, the decision makes clear that a launch at risk by a generic company is very much at their own risk. European courts readily grant preliminary injunctions (PIs) in cases of imminent generic market entry due to the damage this can cause to the patentee. A generic company is now unlikely to recover any damages from the originator company for damages suffered as a result of the PI, even if the patent is subsequently invalidated or found not infringed. 

The big question is how Bayer applies beyond launch-at-risk scenarios. It is worth noting here that several European jurisdictions apply a strict liability rule to enforcement of preliminary decisions that are later revoked. Thus, if the outcome in Bayer indeed extends to all provisional measures in IP cases, that would mean a major departure from well-established legal practice in a significant number of Member States. 

[This is an Authors' Take post, which provides readers with an insight into current IP scholarship, featuring preliminary comments and thoughts from authors of articles accepted for publication in forthcoming issues of the Journal of Intellectual Property Law & Practice (OUP). The full text of this contribution will be made available on Advance Access soon]