This case established the test required to be satisfied before an interlocutory injunction is granted.
Facts of the Case
The Appellant (American Cyanamid Co.) is an American company that held a patent for the use of an artificial absorbable surgical sutures of filaments made of a particular chain polymer known as “a polyhydroxyacetic ester” (“PHAE”). It is a type of thread for stitching up wounds that will disintegrate and absorb by the human body after some time. the patent was registered in United Kingdom in 2 October 1964. At that time, absorbable sutures were made from animal tissues popularly known as catgut. The respondent (Ethicon Ltd.) is a subsidiary of another American company were the dominant suppliers of catgut sutures in UK market.
The appellant introduced their patented product in 1970. The chemical substance of the suture was a homopolymer, i.e. all the units in the chain, except for the first and last (“end stabilisers”) consisted of glycolide radicals. By 1973, this product captured 15% of the UK market. Faced with this competition, the defendant proposed to introduce their own artificial suture (“XLG”). The chemical substance of their version of suture was a copolymer, i.e. the chain consisted of 90% glycolide radicals and 10% lactide radicals which has similar chemical properties to glycolide radicals.
Appellant contended that XLG infringed their patent. Their patent claim was “A sterile article for the surgical repair or replacement of living tissue, the article being readily absorbable by living tissue and being formed from a polyhydroxyacetic ester.” The Process for manufacturing filaments from PHAE had been subjected to earlier US patents. Thus, the appellant’s claim is for the discovery of a new use for a known substance.
On March 5, 1973, appellant started a quia timet action against defendant for an injunction to restrain the threatened infringement of their patent by supplying sutures made of XLG to surgeons in the United Kingdom. On the same day, they gave notice of motion for an interlocutory injunction. The High Court granted the interlocutory injunction upon the undertaking in damages by the appellant. The respondent appealed and the Court of appeal allowed the appeal. Thus, appellant appealed to the House of Lords.
Issue of the Court
Whether the appellant had established a prima facie case that is necessary for the Court to grant an interlocutory injunction?
Judgment of the Court
The Court laid down the test which is required to be satisfied before an interlocutory injunction is granted. First, the plaintiff needs to show “a probability that the plaintiff is entitled to relief” or “a strong prima facie case” through affidavit evidence. The plaintiff needs to satisfy the court on the balance of probabilities or have more than 50% of succeeding in his claim for a full injunction at the trial. The court must be satisfied the claim is not frivolous or vexatious.
If the plaintiff satisfies the first requirement, the Court will continue to consider the issue on damages. If the plaintiff is successful at full trial and plaintiff would be adequately compensated in damages for his loss and defendant could afford to pay the damages, then injunction should not be granted. If damages would not adequately compensate the plaintiff but it is adequate to compensate the defendant and if plaintiff could afford to pay the damages if defendant won the trial, then injunction should be granted.
Thirdly, if there is a doubt to the adequacy of damages, the Court should look at all circumstances and decide whether the balance of convenience is in favour of granting an injunction.
Fourthly, if the balance of convenience is evenly balanced between the parties, the Court should preserve the status quo. If the defendant had not commenced an act, an injunction should be allowed to restrain him.
Applying the test to the current facts, the House of Lords held that affidavit evidence shows that there are serious questions to be tried as decided by the High Court. Hence, it was necessary to consider the balance of convenience. High Court had come to the conclusion that the balance of convenience lay in favour of granting the appellant an interlocutory injunction. The factors which the High Court took into consideration were that the respondent’s sutures, XLG were not yet available on the market, so they had no business which would bring to a stop. Respondent also held a dominant position in UK market for absorbent surgical sutures. Appellant on the other hand were in the course of establishing a growing market in PHAE surgical sutures which competed with the defendant’s natural sutures.
If the respondent were allowed to establish themselves for PHAE absorbable sutures until the trial is tried and disposed of on appeal, it would take years. The appellant even though ultimately successful in proving infringement, would have lost its chance of continuing to increase its share in the market of absorbent sutures. The Court notes that it takes a long time for a new pharmaceutical product to become established in the market. In addition, once doctors and patients had got used to respondent’s product in the period prior to the trial, it might be commercially impracticable for appellant to deprive the public of the defendant’s product by enforcing a permanent injunction.
Hence, the Court allow the appeal and restore the High Court’s order granting the interlocutory injunction.
Principle of the Case
The test which is required to be satisfied before an interlocutory injunction is granted are:
1. The plaintiff needs to show on the balance of probabilities that there is a serious issue to be tried.
2. If the plaintiff satisfies the first requirement, the Court will continue to consider:
- If damage is adequate compensation for the plaintiff:
If plaintiff succeed and defendant could afford to pay - (injunction should not be granted)
- If damage is not adequate compensation for the plaintiff:
If damages is adequate for the defendant and plaintiff could afford to pay - (injunction should be granted)
3. If there is a doubt to the adequacy of damages, the Court should look at all circumstances and decide whether the balance of convenience is in favour of granting an injunction.
4. If the balance of convenience is evenly balanced between the parties, the Court should preserve the status quo.