In Sanofi S.A. v. Unipharm Ltd., Further Hearings 5679/21 and 5886/21 (26 December 2023), an expanded panel of the Israeli Supreme Court upheld, by four votes to one, the possibility of requiring a pharmaceutical patent applicant to disgorge profits obtained through intentional misrepresentation to the Israeli Registrar of Patents. The claim was based on unjust enrichment, not patent infringement, and concerned an application for a secondary patent that was ultimately abandoned and never granted.
The Justices agreed on the outcome by different routes. Justice Noam Sohlberg relied on the prohibition against abuse of a monopolistic position under Israeli competition law. Justice Anat Baron, joined in substance by former President Esther Hayut and Acting President Uzi Vogelman, grounded the result in the patent applicant’s duty of good faith and fairness toward the Patent Office. Justice Yitzhak Amit dissented from the order for disgorgement, favoring a damages remedy for loss caused to the generic competitor. The amount, if any, to be disgorged was left for further determination by the District Court.
For foreign pharmaceutical companies and patent counsel, the judgment is significant because conduct during Israeli patent prosecution can carry consequences beyond refusal or cancellation of a patent. It does not mean that every inaccurate statement in a patent application entitles competitors to the applicant’s profits. Intentional deception, an appropriate legal basis and a causal connection to the disputed enrichment are central to the analysis.
The Plavix Dispute and Sanofi’s Secondary Patent Application
Sanofi marketed the originator medicine Plavix, containing clopidogrel, and held a dominant position in the relevant pharmaceutical market. After its original patent, Sanofi pursued an additional application concerning a different crystalline form of the drug, known in the litigation as Form 2.
Unipharm, an Israeli generic drug manufacturer, sought to enter the market. It argued that Sanofi had intentionally misled the Registrar of Patents through material contained in, and omitted from, the secondary application. The findings in the proceedings described how this conduct prolonged and complicated examination and opposition proceedings and made it more difficult for generic competitors to assess whether the proposed patent would be granted.
The secondary application was eventually abandoned. No patent issued on it. Yet while it remained pending, a competitor launching a generic product faced uncertainty about potential future infringement claims if the application were granted. The dispute therefore concerned the commercial value of an extended “launch-at-risk” period, rather than an ordinary action to enforce a granted patent.
How the Case Reached the Expanded Supreme Court Panel
On 8 October 2015, the Central District Court, in Civil Case 33666-07-11, held that Unipharm was entitled to an accounting in connection with Sanofi’s conduct. Sanofi challenged that determination.
On 12 July 2021, in Civil Appeal 2167/16, the Supreme Court dismissed Sanofi’s appeal and allowed Unipharm’s cross-appeal regarding the accounting remedy, directing further consideration of profits and restitution. Sanofi and the Attorney General subsequently sought a further hearing before an expanded Supreme Court panel.
The resulting decision of 26 December 2023 examined how patent law, competition law and the Unjust Enrichment Law, 5739-1979, interact when a patent applicant deliberately misleads the Registrar and thereby affects competitive market entry. The Court was not deciding whether Sanofi’s secondary patent should be granted; that application had already been abandoned.
The proceedings should be read as three distinct stages: the 2015 District Court accounting decision, the 2021 Supreme Court appeal, and the 2023 further hearing considered here.
Justice Sohlberg: Abuse of a Dominant Position as the Relevant Wrong
Justice Sohlberg considered that Israeli patent law did not create an exclusive remedial code barring an unjust-enrichment action where the Patent Office was intentionally deceived. He nonetheless sought a concrete breached legal norm before requiring a defendant to surrender potentially substantial profits to a competitor.
For him, the relevant prohibition was Section 29A(a) of Israel’s Economic Competition Law, which prohibits abuse of a monopolistic position in a manner liable to reduce business competition or harm the public. He rejected a narrow interpretation confining abuse to methods that could be used only by a monopolist. An act such as misleading the Registrar may amount to abuse where carried out by a monopoly holder with an adverse effect on competition.
Justice Sohlberg did not regard Section 18C of the Patents Law as a sufficient direct basis for the restitutionary sanction in the circumstances. Nor, in his view, would every breach of a general duty of good faith justify transferring the defendant’s profits to a competitor. This competition-law rationale differed from that adopted by the other Justices who supported the outcome.
Justices Baron, Hayut and Vogelman: The Patent Applicant’s Duty of Fairness
Justice Baron approached the dispute through the duty of good faith and fairness owed by a person seeking an exclusive right from a public authority. A patent applicant must not intentionally mislead the Israeli Registrar of Patents through false statements or the concealment of material information.
Where such intentional misconduct results in gains at the expense of a competitor whose legitimate opportunity to compete fairly has been impaired, it may constitute enrichment obtained without lawful justification. Former President Hayut agreed with this approach, emphasizing the connection between the duty breached and competitors’ legitimate expectation of fair competition.
Acting President Vogelman likewise considered that the claim need not invariably depend on proof that the applicant possessed a monopoly. In the particular dispute, he identified two ways in which Sanofi’s misleading conduct adversely affected Unipharm: prolonging examination and opposition proceedings, and impairing Unipharm’s ability to assess, in real time, the risk involved in launching a generic drug.
These opinions did not dispense with intent or causation. Their position was that deliberate deception of a patent authority may supply the relevant wrongful conduct in an unjust-enrichment claim even where the monopoly-abuse rationale is not established.
Intentional Deception, Materiality and Causation
The further hearing clarified the limits of the claim. Ordinary errors or incomplete prosecution materials do not automatically create liability for disgorgement. The findings concerned intentional misrepresentation, through both affirmative statements and concealment of information, and an enrichment causally connected to that misconduct.
The Court did not impose a rigid requirement that the claimant prove the patent application would necessarily have been refused if the Registrar had received the correct information. Misleading information may also delay examination or opposition, increase uncertainty and affect a competitor’s launch decisions before grant.
Materiality nevertheless remains important as evidence of the applicant’s state of mind and of the link between the deception and the market effect. Counsel should distinguish a patentability error with no proven competitive consequences from conduct that intentionally prolongs uncertainty and delays market entry.
Justice Amit’s Dissent: Compensation Is Not the Same as Disgorgement
Justice Amit agreed that fair competition warrants protection and that Sanofi’s conduct could create liability under competition and tort principles. He disagreed with awarding Unipharm a right to seek Sanofi’s profits through unjust enrichment.
His distinction concerned the remedy: a claimant may recover its own proven loss, including profits it would have earned absent the unlawful conduct, without thereby acquiring the defendant’s entire commercial gain. He would not have required a further accounting directed to the full range of Sanofi’s profits, and favored leaving the District Court’s monetary disposition in place, where the claim had been stated at NIS 2.6 million for fee purposes.
The majority rejected that approach as the exclusive remedy. But it did not award Unipharm all of Sanofi’s profits. The further hearing left the assessment of any recoverable amount, including questions of appropriate restitution, for further judicial examination.
Practical Significance for Foreign Patent Applicants in Israel
International pharmaceutical patent portfolios often involve parallel prosecution in Israel, Europe, the United States and other jurisdictions. Information disclosed in a foreign application, prior statements about a compound or its properties, and facts discovered during development may be relevant to how an Israeli application is presented.
The Sanofi decision demonstrates why foreign originator companies should examine the factual accuracy and completeness of representations made to the Israeli Patent Office, especially when pending applications may affect a competitor’s commercial risk assessment. It also provides a potential cause of action for generic manufacturers when deliberate deception has delayed their entry and generated profits for the applicant.
This remains a fact-sensitive remedy. The decision does not turn every patent prosecution dispute into an unjust-enrichment claim and does not establish a fixed disgorgement percentage. The nature of the misconduct, its deliberate character, causation and identification of the enrichment must be established.
For the judgment, see Sanofi S.A. v. Unipharm Ltd., Further Hearings 5679/21 and 5886/21, Israeli Supreme Court, 26 December 2023. The earlier decisions are discussed separately in the linked guides. For representation before the Israel Patent Office and in related disputes, see Patent Prosecution in Israel and Patent Litigation in Israel.
