AMERICAN CYANAMID
v.
ETHICON LIMITED
Lord Diplock
Viscount Dilhorne
Lord Cross of Chelsea
Lord Salmon
Lord Edmund-Davies
Lord Diplock
MY LORDS,
This interlocutory appeal concerns a patent for the use as absorbable
surgical sutures of filaments made of a particular kind of chain polymer
known as ” a polyhydroxyacetic ester ” (” PHAE “). These are sutures of
a kind that disintegrate and are absorbed by the human body once they
have served their purpose. The Appellants (” Cyanamid “), an American
Company, are the registered proprietors of the patent. Its priority date
in the United Kingdom is October 2nd, 1964. At that date the absorbable
sutures in use were of natural origin. They were made from animal
tissues popularly known as catgut. The Respondents (” Ethicon “), a sub-
sidiary of another American Company, were the dominant suppliers of
catgut sutures in the U.K. market.
Cyanamid introduced their patented product in 1970. The chemical sub-
stance of which it is made is a homo-polymer, i.e. all the units in the chain,
except the first and the last (” the end stabilisers”), consist of glycolide
radicals. Glycolide is the radical of Glycolic acid, which is another name
for hydroxyacetic acid. By 1973 this product had succeeded in capturing
some 15 per cent, of the U.K. market for absorbable surgical sutures. Faced
with this competition to catgut, Ethicon who supplied 80 per cent, of the
market were proposing to introduce their own artificial suture (” XLG “).
The chemical substance of which it is made is not a homopolymer but a
copolymer, i.e. although 90 per cent, by weight of the units in the chain
consist of glycolide radicals, the remaining 10 per cent, are lactide radicals,
which are similar in chemical properties to glycolide radicals but not identical
in chemical composition.
Cyanamid contend the XLG infringes their patent, of which the principal
claim is ” 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.” As is disclosed in the body of the patent,
neither the substance PHAE nor the method of making it into filaments was
new at the priority date. Processes for manufacturing filaments from PHAE
had been the subject of two earlier U.S. patents in 1953 (Lowe) and 1954
(Higgins). The invention claimed by Cyanamid thus consisted of the
discovery of a new use for a known substance.
On 5th March, 1973, Cyanamid started a quia timet action against Ethicon
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.
Voluminous affidavits and exhibits were filed on behalf of each party. The
hearing of the motion before Graham J. lasted three days. On 30th July,
1973, he granted an interlocutory injunction upon the usual undertaking
in damages by Cyanamid.
Ethicon appealed to the Court of Appeal. The hearing there took eight
Jays. On 5th February, 1974, the Court of Appeal gave judgment. They
allowed the appeal and discharged the judge’s order. Leave to appeal
from that decision was granted by Your Lordships’ House. It was estimated
that the hearing in this House of the appeal at which leave to adduce more
affidavit evidence was to be sought would last twelve days.
The question whether the use of XLG as an absorbable surgical suture
is an infringement of Cyanamid’s patent depends upon the meaning to be
given to the three words ” a polyhydroxyacetic ester ” in the principal claim.
2
Cyanamid’s contention is that at the date of publication of the patent those
words were used as a term of art in the chemistry of polymerisation not only
in the narrower meaning of a homopolymer of which the units in the chain,
apart from the end stabilisers, consisted solely of glycolide radicals but also
in the broader meaning of a copolymer of which up to 15 per cent, of the
units in the chain would be lactide radicals; and that what was said in the
body of the patent made it clear that in the claim the words were used in
this wider meaning.
Ethicon’s first contention is that the words ” a polyhydroxyacetic ester ”
in the principal claim bear the narrower meaning only, viz. that they are
restricted to a homopolymer of which all the units in the chain except the
end stabilisers consist of glycolide radicals. In the alternative, as commonly
happens where the contest is between a narrower and a wider meaning in
a patent specification, they attack the validity of the patent, if it bears the
wider meaning, on the grounds of inutility, insufficiency, unfair basis and
false suggestion. These objections are really the obverse of their argument
in favour of the narrower construction. They are all different ways of saying
that if the claim is construed widely it includes copolymers which will not
have as surgical sutures the characteristics described in the body of the patent.
Ethicon also attack the validity of the patent on the ground of obviousness.
Both Graham J. and the Court of Appeal felt constrained by authority to
deal with Cyanamid’s claim to an interlocutory injunction by considering
first whether, upon the whole of the affidavit evidence before them, a prima
facie case of infringement had been made out. As Russell L.J. put it in
the concluding paragraph of his reasons for judgment with which the other
members of the court agreed: —” If there be no prima facie case on the
” point essential to entitle the plaintiff to complain of the defendant’s
” proposed activities, that is the end of any claim to interlocutory relief.”
” Prima facie case ” may in some contexts be an elusive concept, but the
sense in which it was being used by Russell L.J. is apparent from an earlier
passage in his judgment. After a detailed analysis of the conflicting expert
testimony he said: —” I am not satisfied on the present evidence that on the
” proper construction of this specification, addressed as it is to persons
” skilled in the relevant art or science, the claim extends to sterile surgical
” sutures produced not only from a homopolymer of glycolide but also from
” a copolymer of glycolide and up to 15 per cent, of lactide. That is to say
” that I do not consider that a prima facie case of infringement is established.”
In effect what the Court of Appeal was doing was trying the issue of
infringement upon the conflicting affidavit evidence as it stood, without
the benefit of oral testimony or cross-examination. They were saying ” If we
” had to give judgment in the action now without any further evidence we
” should hold that Cyanamid had not satisfied the onus of proving that their
” patent would be infringed by Ethicon’s selling sutures made of XLG.” The
Court of Appeal accordingly did not find it necessary to go into the questions
raised by Ethicon as to the validity of the patent or to consider where the
balance of convenience lay.
Graham J. had adopted the same approach as the Court of Appeal; but,
upon the same evidence he had come to the contrary conclusion on the issue
of infringement. He considered that on the evidence as it stood Cyanamid
had made out a ” strong prima facie case” that their patent would be
infringed by Ethicon’s selling sutures made of XLG. He then went on to
deal briefly with the attack upon the validity of the patent and came to the
conclusion that upon the evidence before him none of the grounds of
invalidity advanced by Ethicon was likely to succeed. He therefore felt
entitled to consider the balance of convenience. In his opinion it lay in
favour of maintaining the status quo until the trial of the action. So he
granted Cyanamid an interlocutory injunction restraining Ethicon from
infringing the patent until the trial or further order.
The grant of an interlocutory injunction is a remedy that is both temporary
and discretionary. It would be most exceptional for your Lordships to give
leave to appeal to this House in a case which turned upon where the balance
3
of convenience lay. In the instant appeal, however, the question of the
balance of convenience, although it had been considered by Graham J. and
decided in Cyanamid’s favour, was never reached by the Court of Appeal.
They considered that there was a rule of practice so well established as to
constitute a rule of law that precluded them from granting any interim
injunction unless upon the evidence adduced by both the parties on the hear-
ing of the application the applicant had satisfied the court that on the balance
of probabilities the acts of the other party sought to be enjoined would, if
committed, violate the applicant’s legal rights. In the view of the Court of
Appeal the case which the applicant had to prove before any question of
balance of convenience arose was “prima facie ” only in the sense that the
conclusion of law reached by the court upon that evidence might need to be
modified at some later date in the light of further evidence either detracting
from the probative value of the evidence on which the court had acted or
proving additional facts. It was in order to enable the existence of any such
rule of law to be considered by your Lordships’ House that leave to appeal
was granted.
The instant appeal arises in a patent case. Historically there was
undoubtedly a time when in an action for infringement of a patent that was
not already ” well established “, whatever that may have meant, an interlocu-
tory injunction to restrain infringement would not be granted if counsel for
the defendant stated that it was intended to attack the validity of the patent.
Relics of this reluctance to enforce a monopoly that was challenged, even
though the alleged grounds of invalidity were weak, are to be found in the
judgment of Scrutton L.J. as late as 1924 in Smith v. Grigg, Limited ([1924]
1 K.B. 655); but the elaborate procedure for the examination of patent
specifications by expert examiners before a patent is granted, the opportunity
for opposition at that stage and the provisions for appeal to the Patent Appeal
Tribunal in the person of a patent judge of the High Court, make the grant
of a patent nowadays a good prima facie reason, in the true sense of that
term, for supposing the patent to be valid, and have rendered obsolete the
former rule of practice as respects interlocutory injunctions in infringement
actions. In my view the grant of interlocutory injunctions in actions for
infringement of patents is governed by the same principles as in other actions.
I turn to consider what those principles are.
My Lords, when an application for an interlocutory injunction to restrain
a defendant from doing acts alleged to be in violation of the plaintiff’s legal
right is made upon contested facts, the decision whether or not to grant an
interlocutory injunction has to be taken at a time when ex hypothesi the
existence of the right or the violation of it, or both, is uncertain and will
remain uncertain until final judgment is given in the action. It was to mitigate
the risk of injustice to the plaintiff during the period before that uncertainty
could be resolved that the practice arose of granting him relief by way of
interlocutory injunction ; but since the middle of the nineteenth century this
has been made subject to his undertaking to pay damages to the defendant
for any loss sustained by reason of the injunction if it should be held at the
trial that the plaintiff had not been entitled to restrain the defendant from doing
what he was threatening to do. The object of the interlocutory injunction is
to protect the plaintiff against injury by violation of his right for which he
could not be adequately compensated in damages recoverable in the action if
the uncertainty were resolved in his favour at the trial; but the plaintiff’s
need for such protection must be weighed against the corresponding need of
the defendant to be protected against injury resulting from his having been
prevented from exercising his own legal rights for which he could not be
adequately compensated under the plaintiff’s undertaking in damages if the
uncertainty were resolved in the defendant’s favour at the trial. The Court
must weigh one need against another and determine where ” the balance of
” convenience ” lies.
In those cases where the legal rights of the parties depend upon facts that
are in dispute between them, the evidence available to the court at the hearing
of the application for an interlocutory injunction is incomplete. It is given
on affidavit and has not been tested by oral cross-examination. The purpose
4
sought to be achieved by giving to the court discretion to grant such injunctions
would be stultified if the discretion were clogged by a technical rule forbidding
its exercise if upon that incomplete untested evidence the court evaluated the
chances of the plaintiff’s ultimate success in the action at 50 per cent, or less,
but permitting its exercise if the court evaluated his chances at more than 50
percent.
The notion that it is incumbent upon the court to undertake what is in effect
a preliminary trial of the action upon evidential material different from that
upon which the actual trial will be conducted, is, I think, of comparatively
recent origin, though it can be supported by references in earlier cases to the
need to show ” a probability that the plaintiff is entitled to relief ” (Preston v.
Luck 27 Ch.D. 497 per Cotton L.J. at p. 506) or ” a strong prima facie case
” that the right which he seeks to protect in fact exists ” (Smith v. Grigg
Limited [1924] 1 K.B. 655 per Atkin L.J. at p. 659). These are to be contrasted
with expressions in other cases indicating a much less onerous criterion, such
as the need to show that there is ” certainly a case to be tried ” (Jones v.
Pacaya Rubber and Produce Company, Limited [1911] 1 K.B. 445 per
Buckley L.J. at p.457) which corresponds more closely with what judges
generally treated as sufficient to justify their considering the balance of
convenience upon applications for interlocutory injunctions, at any rate up
to the time when I became a member of your Lordships’ House.
An attempt had been made to reconcile these apparently differing
approaches to the exercise of the discretion by holding that the need to show
a probability or a strong prima facie case applied only to the establishment
by the plaintiff of his right, and that the lesser burden of showing an arguable
case to be tried applied to the alleged violation of that right by the defendant
(Donmar Productions Ltd. v. Bart [1967] 1. W.L.R. 740 per Ungoed Thomas
J. at p. 742 Harmon Pictures Ltd. v. Osborne [1967] 1 W.L.R. 723 per Goff
J. at p. 738). The suggested distinction between what the plaintiff must
establish as respects his right and what he must show as respects its violation
did not long survive. It was rejected by the Court of Appeal in Hubbard v.
Vosper ([1972] 2 Q.B. 84)—a case in which the plaintiff’s entitlement to copy-
right was undisputed but an injunction was refused despite the apparent weak-
ness of the suggested defence. The Court, however, expressly deprecated any
attempt to fetter the discretion of the court by laying down any rules which
would have the effect of limiting the flexibility of the remedy as a means of
achieving the objects that I have indicated above. Nevertheless this authority
was treated by Graham J. and the Court of Appeal in the instant appeal
as leaving intact the supposed rule that the court is not entitled to take any
account of the balance of convenience unless it has first been satisfied that
if the case went to trial upon no other evidence than is before the court at the
hearing of the application the plaintiff would be entitled to judgment for a
permanent injunction in the same terms as the interlocutory injunction sought.
Your Lordships should in my view take this opportunity of declaring that
there is no such rule. The use of such expressions as ” a probability “, ” a
” prima facie case “, or ” a strong prima facie case ” in the context of the
exercise of a discretionary power to grant an interlocutory injunction leads to
confusion as to the object sought to be achieved by this form of temporary
relief. The court no doubt must be satisfied that the claim is not frivolous
or vexatious; in other words, that there is a serious question to be tried.
It is no part of the court’s function at this stage of the litigation to try to
resolve conflicts of evidence on affidavit as to facts on which the claims of
either party may ultimately depend nor to decide difficult questions of law
which call for detailed argument and mature considerations. These are
matters to be dealt with at the trial. One of the reasons for the introduction
of the practice of requiring an undertaking as to damages upon the grant
of an interlocutory injunction was that ” it aided the court in doing that
” which was its great object, viz. abstaining from expressing any opinion upon
” the merits of the case until the hearing ” (Wakefield v. Duke of Buccleugh
[1865] 12 L.T. n.s. 628 at 629). So unless the material available to the court
at the hearing of the application for an interlocutory injunction fails to
5
disclose that the plaintiff has any real prospect of succeeding in his claim for
a permanent injunction at the trial, the court should go on to consider whether
the balance of convenience lies in favour of granting or refusing the inter-
locutory relief that is sought.
As to that, the governing principle is that the court should first consider
whether if the plaintiff were to succeed at the trial in establishing his right
to a permanent injunction he would be adequately compensated by an award
of damages for the loss he would have sustained as a result of the defendant’s
continuing to do what was sought to be enjoined between the time of the
application and the time of the trial. If damages in the measure recoverable
at common law would be adequate remedy and the defendant would be in
a financial position to pay them, no interlocutory injunction should normally
be granted, however strong the plaintiff’s claim appeared to be at that stage.
If, on the other hand, damages would not provide an adequate remedy for
the plaintiff in the event of his succeeding at the trial, the court should then
consider whether, on the contrary hypothesis that the defendant were to
succeed at the trial in establishing his right to do that which was sought to be
enjoined, he would be adequately compensated under the plaintiff’s under-
taking as to damages for the loss he would have sustained by being prevented
from doing so between the time of the application and the time of the trial.
If damages in the measure recoverable under such an undertaking would be
an adequate remedy and the plaintiff would be in a financial position to pay
them, there would be no reason upon this ground to refuse an interlocutory
injunction.
It is where there is doubt as to the adequacy of the respective remedies in
damages available to either party or to both, that the question of balance of
convenience arises. It would be unwise to attempt even to list all the
various matters which may need to be taken into consideration in deciding
where the balance lies, let alone to suggest the relative weight to be attached
to them. These will vary from case to case.
Where other factors appear to be evenly balanced it is a counsel of
prudence to take such measures as are calculated to preserve the status quo.
If the defendant is enjoined temporarily from doing something that he has not
done before, the only effect of the interlocutory injunction in the event of his
succeeding at the trial is to postpone the date at which he is able to embark
upon a course of action which he has not previously found it necessary to
undertake ; whereas to interrupt him in the conduct of an established enter-
prise would cause much greater inconvenience to him since he would have
to start again to establish it in the event of his succeeding at the trial.
Save in the simplest cases, the decision to grant or to refuse an interlocutory
injunction will cause to whichever party is unsuccessful on the application
some disadvantages which his ultimate success at the trial may show he ought
to have been spared and the disadvantages may be such that the recovery of
damages to which he would then be entitled either in the action or under the
plaintiff’s undertaking would not be sufficient to compensate him fully for
all of them. The extent to which the disadvantages to each party would be
incapable of being compensated in damages in the event of his succeeding
at the trial is always a significant factor in assessing where the balance of
convenience lies; and if the extent of the uncompensatable disadvantage to
each party would not differ widely, it may not be improper to take into
account in tipping the balance the relative strength of each party’s case as
revealed by the affidavit evidence adduced on the hearing of the application.
This, however, should be done only where it is apparent upon the facts dis-
closed by evidence as to which there is no credible dispute that the strength
of one party’s case is disproportionate to that of the other party. The court
is not justified in embarking upon anything resembling a trial of the action
upon conflicting affidavits in order to evaluate the strength of either party’s
case.
I would reiterate that, in addition to those to which I have referred, there
may be many other special factors to be taken into consideration in the
particular circumstances of individual cases. The instant appeal affords one
example of this.
6
Returning, therefore, to the instant appeal, it cannot be doubted that the
affidavit evidence shows that there are serious questions to be tried. Graham
J. and the Court of Appeal have already tried the question of infringement
on such affidavit evidence as was available and have come to contrary
conclusions. Graham J. has already also tried the question of invalidity on
these affidavits and has come to the conclusion that the defendant’s grounds
of objection to the patent are unlikely to succeed, so it was clearly incumbent
upon him and on the Court of Appeal to consider the balance of convenience.
Graham J. did so and came to the conclusion that the balance of con-
venience lay in favour of his exercising his discretion by granting an inter-
locutory injunction. As Patent Judge he has unrivalled experience of
pharmaceutical patents and the way in which the pharmaceutical industry
is carried on. Lacking in this experience, an Appellate Court should be
hesitant to over-rule his exercise of his discretion, unless they are satisfied that
he has gone wrong in law.
The factors which he took into consideration and, in my view properly,
were that Ethicon’s sutures XLG were not yet on the market; so they had no
business which would be brought to a stop by the injunction ; no factories
would be closed and no work-people would be thrown out of work. They
held a dominant position in the United Kingdom market for absorbent surgical
sutures and adopted an aggressive sales policy. Cyanamid on the other hand
were in the course of establishing a growing market in PHAE surgical sutures
which competed with the natural catgut sutures marketed by Ethicon. If
Ethicon were entitled also to establish themselves in the market for PHAE
absorbable surgical sutures until the action is tried, which may not be for
two or three years yet, and possibly thereafter until the case is finally
disposed of on appeal, Cyanamid, even though ultimately successful in
proving infringement, would have lost its chance of continuing to increase
its share in the total market in absorbent surgical sutures which the continua-
tion of an uninterrupted monopoly of PHAE sutures would have gained for
it by the time of the expiry of the patent in 1980. It is notorious that new
pharmaceutical products used exclusively by doctors or available only on
prescription take a long time to become established in the market, that much
of the benefit of the monopoly granted by the patent derives from the fact
that the patented product is given the opportunity of becoming established
and this benefit continues to be reaped after the patent has expired.
In addition there was a special factor to which Graham J. attached
importance. This was that, once doctors and patients had got used to
Ethicon’s product XLG in the period prior to the trial, it might well be
commercially impracticable for Cyanamid to deprive the public of it by
insisting on a permanent injunction at the trial, owing to the damaging effect
which this would have upon its goodwill in this specialised market and
thus upon the sale of its other pharmaceutical products.
I can see no ground for interfering in the Learned Judge’s assessment of
the balance of convenience or for interfering with the discretion that he
exercised by granting the injunction. In view of the fact that there are
serious questions to be tried upon which the available evidence is incomplete,
conflicting and untested, to express an opinion now as to the prospects of
success of either party would only be embarrassing to the Judge who will
have eventually to try the case. The likelihood of such embarrassment
provides an additional reason for not adopting the course that both Graham
J. and the Court of Appeal thought they were bound to follow, of dealing
with the existing evidence in detail and giving reasoned assessments of their
views as to the relative strengths of each party’s cases.
I would allow the appeal and restore the order of Graham J.
Viscount Dilhorne
MY LORDS,
I have had the advantage of reading the speech of my noble and learned
friend, Lord Diplock. I agree with it and that this appeal should be
allowed and the Order of Graham J. restored.
7
Lord Cross of Chelsea
MY LORDS,
For the reasons given by my noble and learned friend Lord Diplock in
his speech, which I have had the advantage of reading in draft, I would allow
this appeal.
Lord Salmon
MY LORDS,
I agree with the opinion of my noble and learned friend Lord Diplock, and
for the reasons he gives I would allow the appeal and restore the order of
Graham J.
Lord Edmund-Davies
MY LORDS,
For the reasons given by my noble and learned friend, Lord Diplock,
I would also allow this appeal.
Source: https://www.bailii.org/
