The Supreme Court of Israel, in an en banc decision, recently upheld an earlier judgement that Sanofi S.A. (“Sanofi”) intentionally deceived and failed to provide material information to the Israeli Patent Office during the prosecution of a patent application in respect of a specific form of Sanofi’s drug Plavix (Clopidogrel Bisulfate).1
Though no patent was ever issued on the application, and indeed Sanofi eventually withdrew the patent application in Israel,2 the Supreme Court held that Sanofi’s deceptive actions deterred the plaintiff from entering the market as a generic competitor to Plavix.
As such, Sanofi’s actions constituted the basis for an unjust enrichment claim advanced against Sanofi by the competitor and, possibly, for future unjust enrichment actions against Sanofi by Israeli medical organizations such as hospitals and insurers. The decision of the Supreme Court has important consequences for patent acquisition, licensing and enforcement in Israel.
While all members of the Supreme Court panel agreed that the unjust enrichment claim against Sanofi could proceed, the justices disagreed regarding the specific legal requirements that Sanofi had violated. The majority of the Supreme Court held that the unjust enrichment claims should be grounded in Sanofi’s failure to prosecute the patent in good faith, while another Justice held that the unjust enrichment claims should be grounded in Sanofi’s abuse of its dominant position in the market. While the majority did not believe that such “abuse of dominance” should be the grounds for unjust enrichment liability in this case, they did not close the door on such claims in future instances.3
The Sanofi decision has clear consequences for patent prosecution in Israel. At the same time, market participants in Israel should be aware of the ramifications of the decision for patent acquisition, licensing and enforcement transactions in the Israeli market.
Patent Acquisition
Entities acquiring Israeli patents should be sure to perform due diligence, and receive representations and warranties, sufficient to provide comfort that all Israeli patent applications were prosecuted in good faith and that all relevant information was disclosed to the Israeli patent office.
In contrast to other jurisdictions where such failures in patent prosecution may result in the invalidity of the patent, the Sanofi decision shows that such actions by a patentee in Israel could also result in the imposition of affirmative liability on the patentee, and potentially on its successors, assigns and licensees practicing the patent in the Israeli market.
Patent Enforcement
The Supreme Court in Sanofi found that the potential deception of, and withholding of material information from, an administrative agency were sufficient to ground a claim of unjust enrichment against Sanofi despite the fact Sanofi withdrew its application and no patent was ever issued.
It is possible that Israeli courts would also apply similar logic regarding lawsuits (or threats to bring suits) to enforce issued and valid patents, to the extent such suits are brought in bad faith – such as suits against products or services which are clearly not infringing, or for unreasonable amounts of damages, or where the patentee misrepresents other aspects of the infringement suit. Such suits (or threats to bring suit) before the judiciary could potentially be grounds for claims of unjust enrichment no less than the problematic patent applications prosecuted by Sanofi before the Israel Patent Office.
Patent Licensing
Competition law principles have been applied in other non-Israeli jurisdictions in the analysis of the licensing and enforcement of FRAND-encumbered patents.4 For example, in the seminal case of Huawei v. ZTE,5 the European Court of Justice held that injunctions for the infringement of standard-essential patents (SEPs) must be sought in a manner consistent with the requirements of European competition law and, as such, holders of SEPs must satisfy certain requirements in the negotiation of FRAND license terms prior to seeking an injunction for infringement.
As noted, under Sanofi, the Israeli Supreme Court did not close the door on the possibility of grounding claims of unjust enrichment on violations of the Israeli prohibitions concerning the “abuse of market dominance”. As such, the Sanofi decision may lead Israeli courts to impose requirements similar to the Huawei decision in the negotiation of FRAND licenses, and potentially even allowing for unjust enrichment claims against patentees that do not satisfy such requirements.
[1] DNA 5679/21 and DNA 5886/21, Sanofi S.A. v. Unipharm Ltd. (Dec. 26, 2023)
[2] Patents in respect of the same form of Clopidogrel Bisulfate were granted in other jurisdictions, including U.S. Patent 6,429,210. There was some initial litigation in the United States concerning the validity of such patent. See Sanofi-Aventis v. Sun Pharm. Indus., 2011 U.S. Dist. LEXIS 51913 (S.D.N.Y.)
[3] A fifth Justice opined that Sanofi’s liability was best grounded as a tort claim (rather than an unjust enrichment claim) against Sanofi, as a result of Sanofi’s abuse of its dominant position. This position seems to have been rejected by the rest of the Court.
[4] FRAND is an acronym for “fair, reasonable and non-discriminatory”. Patentees often make commitments to license patents on FRAND terms in contexts where the patent may grant market power, such as in respect of patents that are essential for the implementation of technological standards.
[5] Huawei Technologies Co. Ltd. v. ZTE Corp., C-170/13 ECJ (2015)
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