News Update Life Sciences

29 October 2020

On 14 October 2020, District Court of The Hague (the "District Court") ruled that pharmaceutical company AstraZeneca wrongfully enforced its patent rights, which unfairly delayed the market entry of cheaper generics. As a result, AstraZeneca is liable for damages incurred by Dutch health insurer Menzis.

XR Patent validity

The Menzis v AstraZeneca case revolves around an extended European patent (the "XR Patent") obtained by AstraZeneca, covering a slow-release version of quetiapine. The XR Patent was litigated in various countries, including the Netherlands. On 7 March 2012, a Dutch court at first instance ruled that the XR Patent was valid in the Netherlands. Three weeks later, the English High Court invalidated the XR Patent in the UK because of the lack of an inventive step. Despite the judgment of the English High Court, AstraZeneca continued litigating in the Netherlands against a pharmaceutical company (Sandoz) that tried to introduce a generic alternative in the Netherlands. On 15 August 2013, AstraZeneca obtained an interim judgment from a Dutch court prohibiting Sandoz from infringing the XR Patent. On 20 August 2013, AstraZeneca served the interim judgment on Sandoz. Sandoz appealed the judgment of the Dutch court of 7 March 2012 to The Hague Court of Appeal, which invalidated the XR patent in this judgment.

Claim for damages

Menzis sought damages, alleging that AstraZeneca unlawfully delayed the generic's market entry by enforcing the XR Patent rights and alleging that AstraZeneca benefited from the artificially high prices resulting from the delayed market entry of the generic at Menzis' expense. Because of this, Menzis had to bear higher costs for reimbursements to patients. The District Court ruled in favour of Menzis, and held AstraZeneca liable to Menzis.

Liability for wrongfully enforcing patent rights

The District Court found that if the generics had entered the market earlier, this would have resulted in considerably lower reimbursement costs for Menzis. In addition, the District Court found that AstraZeneca benefited from the higher prices, which could only be maintained because of the medicinal product's market exclusivity. Menzis was simultaneously forced, because of the applicable regulatory regime, to reimburse patients for these artificially high prices. This resulted in AstraZeneca's unjustified enrichment (ongerechtvaardigde verrijking) at Menzis' expense.

Significantly, the District Court clarified that AstraZeneca's liability is limited to the losses that were incurred between serving the interim judgment and the generic's market access. From the District Court's judgment, it follows that:

• Merely holding on to a patent does not make the patent holder liable, even if there is a serious and non-negligible possibility that the patent will not be upheld.
• Patent holder actions that go further than merely holding on to the patent can lead to liability. The patent holder's liability arises if it enforces its patent rights against a third party while the patent holder knows or should have known that there is a serious, non-negligible possibility that the patent will not be upheld.

The judgment may raise the question of whether it opens new doors to insurers wishing to claim damages from originators that wrongfully enforce their patent rights. This is unlikely, despite that the case is the first of its kind in the Netherlands. In this respect, we note that the District Court itself stressed that AstraZeneca's established patentee liability to Menzis does not imply an extension of the possibilities to establish patentee liability under Dutch law and is fully consistent with the existing legal doctrine.

The News Update Life Sciences about the judgment of the CJEU clarifying the rights of parallel import licence holders can be read here.