The Case

Les Laboratoires Servier and another ('Servier') and Apotex Inc and others ('Apotex')

The Facts

Servier owned the patent for the pharmaceutical Penindropil, which is used to treat hypertension. This expired in 2006, and Servier applied for a patent relating to a 'new' form of the drug (the 'new patent').

Apotex, a manufacturer of generic drugs, went ahead with launching its competing generic version of the new form of Penindropil at the end of July 2006 "at risk" of infringing Servier's new patent, having obtained advice that the new patent was invalid.

Servier commenced infringement proceedings at the beginning of August 2006, and the court granted an interim injunction against Apotex. Servier successfully argued that it would be easier to calculate Apotex's damages in the event of the injunction being wrongly granted than to calculate Servier's loss if the injunction was wrongly withheld.

In August 2007, the High Court held that Servier's new patent was invalid on the basis of obviousness and lack of novelty and the injunction was discharged. This finding was confirmed by the Court of Appeal, which commented that Servier's patent was "the sort of patent which can give the patent system a bad name."

Assessment of Damages

At the beginning of October this year, the High Court addressed the issue of damages payable to Apotex for the loss of profits during the period it was prevented by injunction from selling the generic form of the new drug.

As a result of the interim injunction, Apotex was denied exploitation of its opportunity to enter the market and the judge, Mr Justice Norris, assessed the damages on the basis of this lost opportunity.

When the injunction was lifted in 2007, there were competing manufacturers preparing to sell the generic form of the new Penindropil, and Apotex's market share was smaller and at a lower price. Servier claimed that damages should be assessed on this basis, amounting to a £400,000 loss.

Apotex, however, claimed that damages of £27 million should be awarded. In the short period before the interim injunction was granted, Apotex had made sales amounting to a 60% market share. The loss should be assessed on the basis of the higher market share and price it would have had during the "at risk" period when Apotex began marketing the drug.

The court preferred Apotex's approach, assessing damages on the basis of the hypothetical market for the new version of Penindropil in August 2006.

Damages for loss of opportunity are assessed on the basis of a particular hypothesis, and then reduced by reference to the percentage chance of that hypothesis occurring. Based on the hypothetical market situation in 2006, Apotex's potential loss of profit would have been around £22.5 million, and the court determined that this had around a 67% chance of occurring. As a result, the court awarded Apotex damages of £17.5 million.

Comment

It is a unique feature of the pharmaceuticals market that generic manufacturers are willing to market generic versions of particular drugs "at risk" of infringing another manufacturer's weak patent. The potential losses are huge, although the benefits equally rewarding should the patent transpire to be invalid. 

Holders of pharmaceutical patents often seek injunction to prevent generic manufacturers from infringing their patent. This protects their investment and allows them to recoup the costs of the research, development and marketing of their new invention. However, in Servier's case, the new patent was obtained to keep generic competitors out of the market and it did not genuinely qualify for patent protection.

The court commented that what is required is a rapid method of revoking such a patent before it causes harm to competitors and to the public interest. However, the risk of having to compensate competitors as illustrated in this case may act as a deterrent to prevent pharmaceutical companies from unreasonably defending and obtaining injunctive relief in relation to an invalid patent.