Les Laboratoires Servier (Servier) owned patent EP 1,296,947 relating to the “alpha form” of Perindopril, which is an Angiotensin-Converting Enzyme (ACE) inhibitor used in treating hypertension. Apotex launched a generic version of Perindopril in July 2006. Within a few days, Servier sued Apotex and successfully applied for an immediate interim injunction.
In July 2007, the late Mr Justice Pumfrey held the patent to be anticipated by an earlier Servier patent disclosing Perindopril, thus allowing Apotex to re-enter the market.
Pumfrey J gave Servier permission to appeal, but refused Servier’s request for an extension of the injunction (as did the Court of Appeal). An appeal was heard in April 2008 and was dismissed.
LAW ON DAMAGES
The most recent issue in this saga was the enforcement of the cross undertaking in damages between the parties, which was given when the original injunction was issued. Before considering the specific evidence in this case, Norris J set out the following principles of law for quantifying compensation:
- The cross-undertaking is to be enforced according to its terms. Servier was to comply with any order made by the Court “if the Court…finds [the interim injunction] has caused loss to the Defendants”. Therefore, the approach is compensatory and not punitive.
- The correct approach to assessment is set out obiter by Lord Diplock in Hoffmann-La Roche v Secretary of State for Trade  AC 295 at 361E namely:
“The assessment is made upon the same basis as that upon which damages for breach of contract would be assessed if the undertaking had been a contract between the Plaintiff and the Defendant that the Plaintiff would not prevent the Defendant from doing that which he was restrained from doing by the terms of the injunction: see Smith v Day (1882) 21 Ch D 421 per Brett LJ at p427.”
It is impossible to be precise in calculating Apotex’s loss, but a principled approach required Apotex first to establish on the balance of probabilities that the chance of making a profit was real and not fanciful. If that threshold is crossed then the second stage of the inquiry is to evaluate that substantial chance. The conventional method for calculating the award is to assess damages arising from a particular hypothesis and then make an adjustment by reference to the percentage chance of the hypothesis occurring.
After considering numerous scenarios and computations, Norris J calculated that Apotex was entitled to receive £17.5 million in compensation for lost sales and profits (as compared to the figures of £400,000 presented by Servier and £27 million presented by Apotex).
This decision is a superb primer on how equitable compensation resulting from lost profits is assessed and calculated. It is also a good example of how costly it can be for a claimant in a patent action who, having given a cross undertaking from an interim injunction, ultimately loses the main action.