In Sanofi v. Unipharm Ltd., Civil Appeal 2167/16 (12 July 2021), the Israeli Supreme Court, Deputy President Hanan Melcer and Justices Anat Baron and George Karra, dismissed Sanofi’s appeal and allowed Unipharm’s cross-appeal concerning a claim for profits allegedly obtained by intentionally misleading the Israeli Registrar of Patents. The case arose from a secondary application relating to Sanofi’s Plavix medicine. The Court accepted, on the factual findings before it, that deceptive conduct during prosecution could support a claim in unjust enrichment even though the secondary patent was ultimately abandoned.
The decision is important to international pharmaceutical companies and patent counsel because it concerned not infringement of a granted patent, but whether misconduct in a pending Israeli patent application could delay competition and produce profits subject to restitution. Its doctrinal analysis was subsequently reconsidered by an expanded Supreme Court panel in Further Hearings 5679/21 and 5886/21 (26 December 2023). That later panel upheld the operative outcome but differed over the proper legal basis for unjust-enrichment liability. This article distinguishes the 2021 Court’s analysis from the later decision.
The Proceedings: A Secondary Plavix Patent and Generic Launch at Risk
Sanofi held an original patent concerning Plavix, a medicine containing clopidogrel. After expiration of that patent on 3 February 2008, Sanofi’s separate patent application concerning a crystalline form designated Form 2 remained pending before the Israeli Patent Office. Unipharm, an Israeli generic manufacturer, opposed the application.
The pending application created commercial uncertainty: a generic company entering the market before the Patent Office resolved the application risked a later infringement allegation if the requested patent were granted. This was described as a launch-at-risk period. Unipharm argued that Sanofi had deliberately created or extended that uncertainty by presenting false information and withholding relevant facts about the crystallization forms and priority claims.
The secondary application was eventually abandoned. The dispute continued because an application can influence competitors’ launch decisions, research and development expenditures and market entry even without producing a granted patent.
In Civil Case 33666-07-11 (8 October 2015), the Central District Court, Judge Ofer Grosskopf, granted Unipharm an order for accounts covering Sanofi’s relevant revenues and profits from Plavix in Israel. Sanofi appealed, and Unipharm cross-appealed regarding the relief.
The Supreme Court’s Decision and the Scope of the Appeal
The 2021 judgment rejected Sanofi’s appeal and accepted Unipharm’s cross-appeal. The Court considered whether the District Court had permitted reliance on a legal argument not properly pleaded, whether patent law excluded restitution under the general law of unjust enrichment, whether Sanofi intentionally misled the Registrar, and whether the resulting enrichment was sufficiently connected to the alleged misconduct.
The Court also examined the order for accounts, which the District Court had allowed Sanofi to avoid by electing to accept a monetary claim valued at NIS 2.6 million. The Supreme Court held that this unilateral arrangement did not adequately resolve Unipharm’s demand for an accounting.
For an overseas reader, an accounting is a remedy requiring disclosure of financial information so that the appropriate monetary relief can be assessed. It is not itself an automatic award of every shekel of profit shown in the accounts.
New Legal Arguments on Appeal and the Pleading Issue
Sanofi contended that Unipharm’s reliance on a particular unjust-enrichment analysis amounted to an impermissible expansion of the pleadings. The Court addressed the distinction between introducing a new factual case and relying on a legal characterization of facts already alleged and litigated.
The claim had been directed to the alleged conduct surrounding the secondary application and its effect on generic competition. The Court did not treat the legal characterization as an independent reason to reject the case on the circumstances before it. That procedural conclusion should not be read as permitting a claimant to introduce an entirely different factual cause of action without complying with Israeli pleading rules.
Unjust Enrichment Under Israeli Law
Section 1(a) of the Unjust Enrichment Law, 5739-1979, provides the basic restitutionary framework for benefits received without a lawful basis at another’s expense. The legal question is broader than whether the defendant took property formally owned by the claimant.
The Supreme Court examined distinct conceptual approaches to restitution: enrichment through taking another’s protected resource, enrichment resulting from breach of duties of loyalty or confidence, and enrichment through a breach of rules governing fair competition. The dispute involved an alleged unfair competitive advantage obtained through misuse of a statutory patent examination procedure.
These approaches matter because not every profit earned by an originator company at the expense of a generic competitor is unjust. Lawful patents can protect commercial exclusivity. The claim depends on a wrongful act that makes the particular enrichment legally unjustified, not merely the fact that the defendant was more profitable than a rival.
The Taking Paradigm and a Competitor’s Commercial Expectations
The taking paradigm is most obvious where a defendant gains by exploiting another person’s property. In the commercial context, however, a competitor may complain of the wrongful diversion of customers or impairment of its ability to compete without asserting ownership of customers themselves.
The legal problem is whether mere loss of a business opportunity can establish the basis for restitution or whether an additional wrongful element must be shown. Ordinary competition lawfully redirects customers and profits; requiring a competitor to restore those gains merely because another firm expected sales would contradict the competitive system.
In the Plavix litigation, the alleged additional wrongful element was intentional deception of a public authority, which affected the rival’s risk assessment and the timing of market entry.
The Breach-of-Duty Paradigm
Another unjust-enrichment approach concerns a person who obtains a benefit through violation of a duty of loyalty or similar heightened obligation. Trust and fiduciary relationships are familiar examples, but whether a given relationship carries a comparable duty is a separate legal question.
As applied to patent prosecution, the issue was whether a patent applicant’s obligations toward the Registrar and the legitimate interests of competitors could justify a restitutionary remedy for a gain derived from the violation of those obligations.
The precise source of the wrongful duty was the central point clarified in the later 2023 further hearing. It should therefore not be assumed that the 2021 discussion established a general fiduciary duty between every pair of commercial competitors.
Unjust Enrichment Through Breach of Competition Rules
The 2021 Court treated violation of rules protecting fair competition as a significant framework for analyzing the claimed enrichment. A market actor who knowingly and deliberately breaks such rules may obtain profits at competitors’ expense that would not arise under lawful competition.
The analysis examined Section 29A(a) of Israel’s Economic Competition Law concerning abuse of a monopolistic position and Section 18C of the Israeli Patents Law concerning misleading information submitted in patent examination and related sanctions. These provisions address distinct conduct and are not interchangeable.
The 2021 judgment regarded the prohibition against misleading the Registrar as relevant to the proper functioning of competition within the patent system. Patent rights deliberately restrict competition for a legally specified purpose, but deception aimed at obtaining or prolonging an unjustified competitive advantage is not part of the statutory bargain.
What Did Section 18C of the Patents Law Contribute?
Section 18C addresses specified misleading submissions and failures to update information during the Israeli patent procedure, where the legal conditions are satisfied. It authorizes statutory consequences including refusal or cancellation, licensing on specified terms, shortening of patent duration and a financial penalty in the circumstances set out by the section.
The Court considered that these patent-specific consequences did not necessarily make the Patents Law an exhaustive code excluding all restitutionary relief under general civil law. A request to restore profits obtained through misleading prosecution could address a competitive injury not fully resolved merely by rejecting or abandoning an application.
The 2023 further hearing narrowed and clarified the doctrinal reasoning: Justice Sohlberg did not treat Section 18C alone as the correct direct source for disgorgement, and other Justices emphasized an independent duty of good faith and fairness toward the authority. Foreign counsel should therefore cite both decisions if relying on this area of Israeli law.
Liability Required Deliberate Misconduct, Not an Ordinary Mistake
The Court’s discussion distinguished intentional violations of fair competition rules from patent prosecution errors made without deliberate deception. In the case before it, the District Court had found that Sanofi intentionally misled the Registrar, and the Supreme Court saw no basis to disturb the central factual findings.
A patent applicant’s incorrect technical assumption, an ultimately rejected claim or an application with uncertain prospects is not automatically intentional misrepresentation. The District Court had expressly rejected the allegation that merely filing a supposedly weak secondary application proved misconduct.
This distinction is important where generic competitors routinely oppose patent applications. An aggressive prosecution strategy, a dispute about inventive step or a patent application abandoned before grant does not by itself establish unjust enrichment.
How Sanofi Was Found to Have Misled the Registrar
The factual findings concerned two principal groups of conduct. Sanofi included an incorrect Example 1 and continued to rely on a French patent application containing that example for claimed priority despite knowledge of the defect. Sanofi also omitted material facts about how Form 2 had been discovered and the relationship between Forms 1 and 2, including the difficulty of producing Form 1 in the presence of Form 2 as found by the courts.
The Supreme Court accepted the findings that these acts and omissions could mislead the Registrar and affect the assessment of the application. Their importance was not limited to whether the application would necessarily be allowed; they could complicate the examination and opposition proceedings and contribute to the uncertainty faced by rivals.
Patent disclosures from different jurisdictions may overlap, but an Israeli applicant must consider the statements made in the Israeli proceeding and the obligations applicable there. Reliance on a foreign priority filing does not exempt an applicant from scrutiny of its accuracy.
Competition Law: The Court’s Treatment of Monopoly Abuse
The 2021 Supreme Court judgment did not accept every part of the District Court’s competition-law analysis. In particular, it did not treat Sanofi’s conduct as establishing abuse of a monopoly position under Section 29A(a) in the way the District Court had done, because the misconduct identified could have been committed without deploying powers distinctive to a monopolist.
Nevertheless, the Court treated the conduct as wrongful for purposes of the patent-law and unjust-enrichment analysis on which its result rested. These distinctions explain why the source of the violated norm became the principal subject of the 2023 further hearing.
In that later decision, Justice Sohlberg concluded that Section 29A(a) could apply to the conduct through a broader conception of monopoly abuse, while other Justices supported the outcome on a fairness-based route that did not depend on monopoly status.
Causation: Did Misrepresentation Lead to Sanofi’s Enrichment?
A restitutionary claim requires more than proof that the Registrar was misled. The enrichment sought must be causally related to the wrongful conduct. The 2021 Court considered whether the deception prolonged proceedings, affected the generic manufacturer’s development decisions and delayed competition.
Deputy President Melcer and Justice Baron considered the factual connection adequately established, emphasizing that a competition-protecting remedy need not demand certainty about every hypothetical decision that might have been made had the information been correct. Justice Karra favored a more demanding causal inquiry connecting the misrepresentation to the rival’s mistaken risk assessment and then to its delayed launch or development.
The appeal left intact the conclusion that the factual connection was sufficient in this case. That conclusion should not be converted into a presumption that every misleading patent submission generates recoverable profits.
Unipharm’s Cross-Appeal: Accounts Versus a NIS 2.6 Million Election
On 8 October 2015, the Central District Court held that Unipharm could obtain financial accounts concerning Sanofi’s relevant sales and profits in Israel. The Court also permitted Sanofi to avoid providing accounts by electing to accept the claim in full for the stated amount of NIS 2.6 million.
Sanofi elected that alternative on 3 January 2016, and judgment followed on 4 February 2016. Unipharm cross-appealed, asserting that an order for accounts had been its principal requested relief and could not be displaced by an alternative offered only to Sanofi.
The Supreme Court accepted that objection. The unilateral arrangement had not given Unipharm a fair opportunity to address the substitution of remedies, and Unipharm had not waived its right to challenge it. The matter was therefore returned for the proper accounting process, subject to conditions concerning Unipharm’s continued insistence on the accounting and the sums already paid.
The Court emphasized the difference between finding a valid unjust-enrichment cause of action and determining the proper amount of restitution. Section 2 of the Unjust Enrichment Law permits the court to reduce or exempt restitution where it would be unjust in the relevant circumstances. Sanofi’s profits, the size of the relevant market, the role of other competitors and the connection between the misconduct and specific gains could matter to the final calculation.
That discretion is not a reason to bypass factual examination. Nor does entitlement to accounts guarantee recovery of all profits disclosed in those accounts.
Later Development: The 2023 Further Hearing
After the 2021 judgment, Sanofi and the Attorney General sought further review. On 26 December 2023, an expanded five-Justice panel decided Sanofi S.A. v. Unipharm Ltd., Further Hearings 5679/21 and 5886/21.
The Court left the operative result in place by four votes to one, while dividing over its legal basis. Justice Sohlberg used the monopoly-abuse prohibition; Justices Baron, Hayut and Vogelman relied on the patent applicant’s obligations of good faith and fairness; and Justice Amit dissented from the right to disgorge profits, favoring compensation for actual loss.
The combined decisions should be understood together. The 2021 Court’s particular formulation concerning breach of competition rules was not adopted in identical terms by every member of the expanded panel. The later judgment confirmed the possible availability of unjust-enrichment relief for intentional misrepresentation and left the amount of any restitution for further determination.
Related Development: Unipharm v. GlaxoSmithKline and Limitation
In a separate dispute, Unipharm pursued claims concerning the effect of a patent application on generic competition against GlaxoSmithKline. In Civil Appeal 5474/18, decided by the Israeli Supreme Court on 18 June 2024, the appeal was dismissed on limitation grounds. Waiting for the conclusion of patent opposition proceedings did not, by itself, postpone the running of the limitation period for the civil claim.
This development is relevant to both potential claimants and originator defendants: patent opposition, patent validity and claims concerning market-entry harm follow different procedural and legal paths.
Practical Implications for Foreign Pharmaceutical Patent Counsel
Patent applicants before the Israeli Patent Office should make sure that technical examples, asserted foreign priorities and material facts are presented accurately, particularly where pending rights influence rivals’ decisions. Overseas prosecution practice should not be assumed to provide a complete answer to Israeli statutory and civil-law consequences.
Generic companies considering a restitutionary claim must gather contemporaneous evidence of the misleading conduct, how it affected the Israeli patent process, the effect on their launch decisions and the connection to the originator’s resulting gain. Proving patent invalidity or abandonment alone is not enough.
The principal case is Sanofi v. Unipharm Ltd., Israeli Supreme Court, Civil Appeal 2167/16 (12 July 2021). For the earlier factual findings see the 2015 District Court accounting decision; for the operative later clarification see the 2023 further hearing. For representation, see Patent Litigation in Israel and Patent Prosecution in Israel.
