American Cyanamid v Ethicon [1975]

American Cyanamid Co v Ethicon Ltd [1975] UKHL 1 is a landmark English civil procedure case that set out the principles for granting interim injunctions, which is an interim court order issued during the course of a legal proceeding before the case reaches a final judgment. This type of injunction is designed to preserve the status quo or prevent irreparable harm until the court can make a final decision on the merits of the case. The case clarified the circumstances under which a party may obtain an interlocutory injunction and provided a structured framework for courts to follow.

American Cyanamid, the claimant, held a patent for absorbable surgical sutures. Ethicon Ltd, the defendant, was a British company that intended to launch a similar surgical suture in the British market, which American Cyanamid claimed infringed on its patent. American Cyanamid sought an interim injunction to prevent Ethicon from using this type of surgical suture until the patent infringement case could be fully tried.

At the initial trial, the court granted an interim injunction to American Cyanamid, preventing Ethicon from using the disputed surgical suture until the patent infringement trial concluded. Ethicon appealed, and the Court of Appeal discharged the interim injunction. Dissatisfied with this outcome, American Cyanamid appealed to the House of Lords, which ultimately allowed the appeal, reinstating the interim injunction. The House of Lords established a series of guidelines to determine whether an interlocutory injunction should be granted and ruled that the balance of convenience favoured American Cyanamid.

Principle 1: Serious Issue to Be Tried
The court must first determine whether there is a sufficiently serious or substantial issue to be tried at the full trial. The applicant must show that their case is not frivolous or vexatious and that there is a real question to be resolved. This principle ensures that injunctions are granted only when there is a genuine legal dispute and a reasonable prospect of success at trial. It avoids the premature use of injunctions in cases with no substantive merit.

Principle 2: Adequacy of Damages as a Remedy
The court must evaluate whether monetary damages would adequately compensate the claimant if an injunction is not granted. If damages can fully address the claimant's potential losses, an interim injunction may be unnecessary. This principle recognises that injunctions are an extraordinary remedy and are only appropriate when there is a risk of irreparable harm that cannot be remedied through compensation.

Principle 3: Undertaking in Damages
Where damages are deemed inadequate, the court will consider whether the claimant is able to provide an undertaking in damages. This undertaking acts as a safeguard for the defendant, ensuring that they can be compensated for any losses incurred as a result of the injunction if it is later found to have been unwarranted. The requirement for an undertaking highlights the court’s efforts to balance the interests of both parties and prevent undue harm to the defendant.

Principle 4: Balance of Convenience
In situations where damages are not an adequate remedy for either party, the court will assess the balance of convenience. This involves weighing the potential harm each party would suffer if the injunction is granted or refused. The court aims to minimise the overall harm caused during the interim period, ensuring that the decision serves the greater justice.

Principle 5: Maintaining the Status Quo
If the above factors are evenly balanced, the court should consider maintaining the status quo. This means preserving the existing state of affairs until the full trial. The goal is to avoid premature interference in the parties' activities unless it is absolutely necessary to prevent harm. Maintaining the status quo is particularly important in ensuring that the court’s interim decision does not unfairly prejudice either party before the case is fully heard.

The principle of considering whether damages are an adequate remedy was further examined by the Court of Appeal in AB v CD [2014]. In this case, the court upheld an interim injunction despite the presence of a liquidated damages clause in the contract. The court reasoned that the damages clause represented a secondary obligation, and the injunction was necessary to enforce the agreement's primary obligation. The case clarified that even if a contract contains a damages clause, an interim injunction may still be granted if damages are not an adequate remedy due to the primary obligations of the parties.

The American Cyanamid principles have been widely referenced and refined in subsequent cases. For example, in Fellowes & Son v Fisher [1976], Lord Justice Brown codified these principles into seven points. Furthermore, in Metropolitan Resources North West Ltd v Secretary of State for Home Department [2011] case, Newey J emphasised that the threshold for establishing a serious issue to be tried 'is a relatively low one'.

In summary, the case established essential guidelines for the grant of interlocutory injunctions in English law, emphasising the need for a serious case, the consideration of damages, the balance of convenience, and the potential for maintaining the status quo when making such decisions. These guidelines are known as the American Cyanamid Principles and have continued to be influential in English legal practice and beyond.