A combination of successful Canadian and English judgments for Servier require Apotex to repay ₤17.5 million to Servier

Servier developed perindopril erbumine (“perindopril”) which is a successful long lasting ACE inhibitor sold under the trade-mark COVERSYL.  In Europe, Servier’s first and basic patent covering perindopril (the ’658 patent) expired in September 2001.  Servier was also granted a number of follow-on patents relating to various inventive concepts around the perindopril molecule including a patent to a particular crystalline form (the ’341 patent).  The ’341 patent expires in 2020.

On July 24th 2006, an Apotex UK subsidiary received marketing authorisation to sell a generic version of COVERSYL in the UK.  The perindopril for this was made in Canada and shipped to the UK for sale by Apotex UK.  Sales commenced on July 28th 2006, and in early August 2006 Servier sought and was granted an interim injunction enjoining Apotex from importing perindopril into the UK or selling it in the UK until trial of a patent infringement action brought by Servier.  As is usual, in return for the injunction, Servier gave a cross-undertaking in damages to the court.

In July 2007, the English High Court held that the ’341 patent was infringed but was invalid.  The Judge discharged the injunction and ordered an enquiry as to damages in respect of Servier’s cross-undertaking.  In June 2008, the High Court heard the damages enquiry.  Apotex lead evidence that the perindopril raw material was manufactured in Canada by Apotex and made into tablets in Canada and then sold to Apotex UK for sale onto the UK market.  Based upon, relatively speaking, lower Canadian manufacturing costs and higher sales revenue in the UK, Apotex alleged that it lost between ₤17.6 million - ₤26 million by being kept off the market for the period of the injunction.  In October 2008, the Judge hearing the damages enquiry ordered Servier to pay ₤17.5 million compensation to Apotex.

Over a similar time period, some relevant events were transpiring in Canada.  The Canadian patent for the basic perindopril molecule (i.e. the equivalent to the ’658 patent) was filed in October 1981 but due to lengthy conflict proceedings was only granted in 2001 (the ’196 patent).  The ’196 patent expires in 2018.

In August 2006, Servier’s Canadian counsel wrote to Apotex to allege infringement of the ’196 patent in Canada.  The allegations arose primarily because of representations made by Apotex’s English counsel to the English High Court during the injunction hearings that the perindopril was made in Canada.  As a result, Servier commenced infringement proceedings in Canada.  In July 2008, the Federal Court held that the ’196 patent was valid and infringed by Apotex’s manufacture of perindopril in Canada.  And, in 2009, the Federal Court of Appeal dismissed the appeal and in March 2010 the Supreme Court of Canada dismissed Apotex’s application for leave to appeal.

Given that the Canadian courts had held that Apotex’s manufacture of perindopril in Canada was an infringement in Canada, Servier applied to the English High Court to recover the ₤17.5 million it was ordered to pay Apotex following the damages enquiry.  The primary ground for the application was the ‘illegality defence’ (ex turpi causa non oritur actio) in that no action can arise from an illegal or immoral act.  In particular, Servier alleged that Apotex should not be permitted to recover damages from the English courts for being prevented from selling perindopril in the UK from August 2006 until July 2007 as the manufacture of that perindopril in Canada was an infringement of a Canadian patent.

The English High Court held that given that Apotex was on notice of the existence of the ’196 patent in Canada and on notice of the nature of the infringing acts it was performing in Canada since at least August 2006, Apotex had sufficient knowledge or awareness for the ‘illegality defence’ to apply.  Furthermore, it was held by the English High Court that Apotex committed the infringing acts in Canada intentionally in that it decided to take a commercial risk by continuing to manufacture perindopril in Canada aware of the existence of the ‘196 patent.  As a result, Apotex was ordered to repay the ₤17.5 million to Servier.

Conclusion:

This decision is a remainder of the interrelated world of manufacture and jurisdiction, and that parties to disputes need to have a coherent approach to their international disputes even when they appear jurisdictional specific as the actions in one may well affect the results in another.