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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Smithkline Beecham Plc & Anor v Apotex Europe Ltd. & Ors [2003] EWCA Civ 137 (14 February 2003) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2003/137.html Cite as: [2003] EWCA Civ 137, [2003] FSR 31 |
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
MR JUSTICE JACOB
Strand, London, WC2A 2LL | ||
B e f o r e :
LORD JUSTICE CARNWATH
and
SIR CHRISTOPHER STAUGHTON
____________________
(1)  SMITHKLINE BEECHAM PLC(2) GLAXOSMITHKLINE (UK) LIMITED | Claimants/ Respondents | |
| - and - | ||
| APOTEX EUROPE LIMITED NEOLAB LIMITED WAYMADE HEALTHCARE PLC | Defendants/ Appellants |
____________________
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr Andrew Waugh QC, Mr Justin Turner and Mr Geoffrey Pritchard (instructed by Simmons & Simmons) for the Respondents/Claimants
____________________
VERSION OF JUDGMENT
AS APPROVED BY THE COURT
Crown Copyright ©
Lord Justice Aldous:
SmithKline Beecham Plc and GlaxoSmithKline (UK) Limited who are respectively the proprietor and the exclusive licensee of UK Patent No 2297550. I will refer to them as SB. The defendants are Apotex Europe Limited, Neolab Limited and Waymade Healthcare Plc. For the purposes of this appeal there is no need to differentiate between them and I will refer to them as Apotex.
valid. Both parties have appealed and the appeal is due to be heard in May 2003. SB have applied to amend their patent to reflect the conclusions reached by Pumfrey J and the extent to which it will be necessary will depend on the outcome of SB's appeal.
Apotex. Apotex assert that they do not use that process as they make and intend to sell hydrochloride anhydrate without using the claimed process. They also contend that claim 11 is invalid. There are substantial issues between the parties on infringement and validity.
Apotex did not contend that that conclusion was wrong. They submitted that the judge was wrong to grant an interlocutory injunction on a number of grounds which I will deal with in turn.
Apotex submitted in their skeleton argument that no interlocutory injunction should have been granted because infringement, even if established at trial, would result in no unquantifiable loss as the only damages that could be recovered would be assessed upon a reasonable royalty basis. To support that submission they referred to such cases as General Tire and Rubber Company v Firestone Tyre and Rubber Company Limited [1976] RPC 197 and Gerber Garments Technology Inc. v Lectra Systems [1997] RPC 443.
"Infringement of a patent is a statutory tort; and in the ordinary way one would expect the damages recoverable to be governed by the same rules as with many or most other torts. We were referred to Halsbury's Laws of England (4th edn)
1141. Causation in tort. Subject to foreseeability and the principles of public policy it is prima facie necessary and sufficient for a plaintiff to prove that a defendant's wrongdoing was a cause and not necessarily the sole or dominant cause of his injuries, as a matter of physical consequences or common sense, but subsidiary principles associating foreseeability and causation have been evolved in certain categories of concurrent or intervening causes.
It is not enough that the loss would not have occurred but for the tort; the tort must (for present purposes at any rate) be, as a matter of common sense, a cause of the loss.
There is no dispute about foreseeability or causation in the present case. It is conceded that both requirements (if there are two) are satisfied. What is said is that either the general rules in Halsbury do not apply to the Patents Act, or else there is now a fourth limitation which must be satisfied. That fourth limit is to be derived from the speech of Lord Hoffmann in South Australia Asset Management Corporation
…
My answer would be, at first impression, that the Patents Act is aimed at protecting patentees from commercial loss resulting from the wrongful infringement of their rights. That is only a slight gloss upon the wording of the statute itself. In my judgment, again as a matter of first impression, it does not distinguish between profit on the sale of patented articles and profit on the sale of convoyed goods. So I must look to see whether any such distinction emerges from the case law.
…"
"
"But I am not going to say a word which will tie down future judges and prevent them from exercising their judgment, as best they can in all the circumstances of the case, so as to arrive at that which the plaintiff has lost by reasons of the defendant doing certain acts wrongfully instead of either abstaining from doing them, or getting permission to do them rightfully."
Beyond that the assessment of damages for infringement of a patent is in my judgment a question of fact. There is no dispute as to causation or remoteness in the present case; nor can I see any ground of policy for restricting the patentees' right to recover. It does not follow that, if customers were in the habit of purchasing a patented article at the patentee's supermarket, for example, he could claim against an infringer in respect of loss of profits on all the other items which the customers would buy in the supermarket but no longer bought. The limit there would be one of causation, or remoteness, or both. But the present appeal, in so far as it seeks to restrict the scope of recovery, should be dismissed.
It remains to mention first that in Watson Laidlow & Co. Ltd.
Apotex, also submitted that SB had not shown that after trial they would recover any damages. First, he drew attention to the fact that the patent had been held invalid, save for claim 11, and that amendment had been proposed. It followed that damages would not be recoverable unless SB established that the specification of the patent before amendment was framed with reasonable skill and knowledge (see section 62(3) of the Patents Act 1977). In the present case, he submitted, the evidence did not establish an arguable case that the specification had been framed with the appropriate skill and knowledge. Second, he submitted that the damage claimed, being damage caused to the sales of SB's hemihydrate, was too remote and therefore not recoverable.
very important considerations when deciding whether to grant an interlocutory injunction, but the court's jurisdiction to grant interlocutory injunctions is not limited as a consideration of the ambit of section 37(1) of the Supreme Court Act 1981 makes clear. In any case where use of a property right is in issue, damage may not be the main consideration. As Lord Diplock said in American Cyanamid Co v Ethicon Ltd [1975] AC 396 at 406:
"The object of the interlocutory injunction is to protect the plaintiff against injury by
valid patent, such as the patent in suit. Subsection (2) prevents damages and costs being awarded to the patentee unless good faith and reasonable skill and knowledge are proved. That is consistent with section 62 to which I have referred. But it is notable that there is no restriction upon the grant of an injunction to prevent further infringement and, absent extraordinary circumstances, I envisage that the court would grant an injunction to a successful patentee. If a final injunction would normally be granted in cases where damages after amendment would not be recoverable, there is no principle which would preclude an interlocutory injunction from being granted in similar circumstances. The judge was right to reject Apotex's submissions.
v Eastman Kodak Company [1977] RPC 379. At page 394 Buckley LJ said:
"The learned judge appears to have regarded the plaintiffs' whole United Kingdom business in instant photographic products as the relevant field of inquiry. With deference, I think this may not be right. One only of the patents in suit relates in any way to the "peel-apart" process. That is a patent numbered 1,071,088, which relates to films, the invention of which can, as I understand it, be used in either process. There is no evidence that any other "peel-apart" processes used by the plaintiffs are now protected by patents. To any extent that they are not so protected, the defendants are entitled to compete with the plaintiffs in using them. To any extent that they are so protected, the relevant patents protect the plaintiffs from infringement of the claims of those patents, but do not protect the plaintiffs from any form of trade competition which does not infringe those patents. The patents in suit protect the plaintiffs from infringement of the claims of those patents. Can they also protect the plaintiffs from loss resulting from competition in respect of goods of a different kind not protected by the patents in suit occasioned by acts involving infringement of the patents in suit? In other words, can infringement support a claim for what is sometimes graphically (but I think rather inelegantly) described as parasitic damages? Each patent is designed to protect the monopoly granted by that patent. This, I think, appears from the form of the grant, in which the command against infringement contained in it is expressed to be "to the end that the patentee may have and enjoy the sole use and exercise and the full benefit of the said invention". The patent is not, in my opinion, intended to protect the patentee in the enjoyment of any other subject-matter. Accordingly, I am inclined to think that any effect which the defendants' sales of "integral" products in the United Kingdom may have on the plaintiffs' "peel-apart" business (except perhaps in respect of infringements of No. 1,071,088) is irrelevant. But I do not think that it is necessary for present purposes to express a concluded
"I agree with the order my Lord has proposed and with the reasons which he has given for it. Like my Lord, I think the plaintiffs are not entitled to rely upon any apprehended injury to their "peel-apart" business, save in so far as it might arise from an infringement of the one patent No. 1,071,088, and that could not cover anything like the whole ambit of the "peel-apart" business. So to rely would be setting up a monopoly wider than that granted by the relevant patents.
I think it might also be put another way, that such damage is too remote and that one is not entitled to an injunction to avoid damages which, if suffered, would be too remote. But I agree with my Lord that it is not necessary for us to resolve those questions, nor should we at this stage do so."
v Kimberly-Clark Ltd [1996] FSR 680 at 692.
"But the important point for present purposes is the plaintiffs' claim for an injunction as a protection against, among other things, avowedly irrecoverable loss elsewhere in the Mölnlycke division of the Svenska group. It seems to me that that approach is wrong in principle. In general (and I am putting on one side actions based on the apprehension of non-economic loss, such as some breaches of confidence, and other special cases such as antisuit actions) injunctions are granted in order to protect a plaintiff from loss which would sound in damages, not from loss which would not sound in damages. As Goff L.J. said in Polaroid Corporation
. . . can only be reconciled if one could draw a rational distinction between taking sales of unpatented items during the life of the patent and establishing a better position to take such sales after expiry. Yet both are caused, and foreseeably caused, by infringement.
Jacob J. then went on to note, at pages 399 and following, that remoteness of damage is a matter not only of foreseeability, but also of policy, and policy considerations weighed heavily with Jacob J. in his differing from the
I have gone into this point at some length only to show that Jacob J. did not in any way differ from the general statement by Goff L.J., that a plaintiff is not entitled to an injunction to avoid damages which would be too remote, and as an introduction to what Jacob J. then said, at pages 408 and following, about sales through subsidiaries. In that case (see at page 408) the proprietor of the patent effected sales through subsidiaries which were not exclusive licensees, but Jacob J. included profits lost to the subsidiaries as being within the claim. In doing so, he followed the Court of Appeal in George Fischer Great Britain
I am inclined to think – and here I am not, I believe, differing in any way from Jacob J. – that the true dividing line is not between tort (including patent infringement) on the one side and breach of contract on the other, but that it is a question of looking to see which plaintiff has a cause of action and what economic loss it has really suffered, while being properly sceptical of a company and its shareholder, individual or corporate, seeking to recover duplicated damages in respect of the same wrong. But I need not express any definite
views expressed in the Polaroid and Peaudouce cases into a rule of law or practice applicable to other cases. The facts in those cases were not typical and questions of recoverability of damages could have been crucial. However it must be remembered that the grant of an interlocutory injunction is a discretionary remedy that should be available to prevent injustice. It would be unusual to grant an interlocutory injunction to protect a property right if no damages for infringement could be recovered. But if the claimant has a cause of action to protect a property right recognised by the law, there is no reason in principle why the court should not grant an interlocutory injunction to protect that right, even if damages are not recoverable.
Apotex submitted that no arguable case had been made out for recovery of damages for infringement of the patent. I start first with the submission that SB had not established an arguable case that the specification had been framed with reasonable skill and knowledge and therefore damages would not be recoverable before the date of the amendment which would not happen before the trial of these proceedings.
Beecham Group Ltd in October 1985. That passage Mr Watson submitted, disclosed a workable way of producing the anhydrate form. The 407 application was drawn to the attention of SB's patent agent Vivian West, but SB did not take appropriate action to limit the claims. There was no justification for any claim in the form of claim 3 that was considered in the BASF case and was held invalid. Thus that claim was covetous. Second, he drew to our attention conclusions reached by Pumfrey J in the BASF proceedings that the specification was not properly drawn in that it failed to define certain phrases such as "conventional oven drying" and "substantially free".
Apotex needed to put forward, in a witness statement, the reasons as to why they contended that the specification was not framed with reasonable skill and knowledge. In this case Mr Watson told the judge at the hearing on 29th October 2002 that Apotex would contend at the main hearing that was due that the specification had not been framed with reasonable skill and knowledge, and therefore they would contend that damages would not be recoverable in this case as the hearing for amendment would not take place until after the trial in this action. The ground relied on related solely to the lack of clarity in the phrases to which I have referred. It was for that reason that SB filed a witness statement from Vivian West and another by Peter Lawton which explained what had happened. Vivian West said that she considered the prior art and information available to her and concluded that the amendments, which were subsequently made and therefore formed part of the specification considered by Pumfrey J, were appropriate and were in the form to which SB were entitled.
Apotex provided a witness statement from Mr John Brown, a patent agent. He agreed with Pumfrey J's criticisms of the lack of definition in the phrases. He concluded that the difficulties in construction, stemming from the expression "substantially free", indicated to him that the specification was not drafted with reasonable skill and knowledge. That witness statement was met by a witness statement of Mr Ritter, a patent agent instructed by SB. He said that with hindsight it could be contended that certain technical terms could have been further defined, but without that hindsight the draughtsman of the specification was not remiss in not defining terms such as "substantially free" more tightly. To support his evidence he produced a draft witness statement he had prepared before seeing the judgment of Pumfrey J which stated that the appropriate skill and knowledge had been used.
Apotex's sales of the anhydrate would not be too remote.
"61. The upshot of all the foregoing is that I hold that there is a serious issue to be tried. Following the Cyanamid guidelines the next question to be considered is whether damages are an adequate remedy either to the claimant or to
62. Mr Watson accepted that he had a tall order to persuade me that I was wrong last time. He made the same points as were made last time. The point he concentrated upon most, namely that if his clients enter the market there will be a certain history as to what happened to SB's sales and the inroads made into their market, whereas if an injunction is granted how much
63. As in the last case there is evidence of the difficulty of raising a price once it has been lowered and of the complications of the fact that the prices link with the prices for other drugs and so on. I think there would be formidable difficulties in SB's way if it tried to get back to its present position after a major collapse of prices. I remain firmly convinced that the damage caused by entry into the market on a substantial scale will be both
64. I also accept that the damage to
Apotex's intrusion into the market with consequent loss of sales by SB. If an injunction were to be wrongly granted, it would be a matter of speculation as to whether other companies would have entered the market and their effect. The judge's suggestion that the history after trial would be a guide was wrong as it would not be possible to predict whether the events after trial would have been the same as those that would have occurred if there had been no injunction.
view for that of the judge. In support he referred us to this part of the speech of Lord Diplock in Garden Cottage Foods Ltd v Milk Marketing Board [1984] 1 AC 130 at 137:
"In an expedited appeal by the company against the judge's refusal to grant an interlocutory injunction, the Court of Appeal [1982] Q.B. 1114 delivered an extempore judgment on May 18, 1982, shortly after the publication in the Weekly Law Reports [1982] 2 W.L.R. 322 of the decision of this House in Hadmor Productions Ltd.
Apotex were free to market their product, then others would follow. The result would be aggressive competition leading to a downward price spiral, a lower drug tariff price and very substantial damage to SB. The price could thereafter never be restored with dire consequences for SB.
Apotex accept that there would be, pending trial, a reduction in price, but their witness Mr Ansell said that SB had sufficient market power to reinstate prices at the current levels. That was disputed by Mr Riley of SB. That clash of evidence makes it impossible to decide whether the price would be restored.
Apotex on the cross-undertaking as to damages. Further, there was no clear case to conclude that it would be easier to assess the damages due to SB if no injunction was granted than it would be to assess the damages to Apotex under the cross-undertaking of damages if an injunction was wrongly granted. He was therefore entitled to maintain the status quo, particularly as the trial was only a few months away. Further, he was entitled to have in mind that Apotex could have resolved the question of infringement and validity if they had acted timeously as it was they that could have done that and not SB.
Apotex rightly submitted that there was no obligation on a potential defendant to start proceedings. However this was a case where Apotex intended to come on to the market with their product and they must have realised, back in November 2001, that SB would be likely to seek an interlocutory injunction if there was an arguable case of infringement. It was Apotex who knew the process that was to be used and when they intended to launch their product, but they refrained from telling SB until the late autumn of 2002. If they had wanted to they could have had the issue of infringement and validity decided before launch. They chose not to do so with the result that there was potential injustice whichever way the court decides.
view entitled to take into account when deciding to maintain the status quo that Apotex walked into the situation that they find themselves in with their eyes open to the risk that they were taking. They knew the risk and decided that it was best not to remove it. To preserve the status quo as the judge did meant that Apotex would only temporarily be prevented from doing that which they have not yet done. If they are right, the court will have to do the best it can to compensate them under the cross-undertaking.
Lord Justice Carnwath :
v Kimberly-Clark Ltd. [1996] FSR 680 (referred to at paragraph 17 of Aldous LJ's judgment). In the passage quoted by him there is the following sentence:
"In general (and I am putting on one side actions based on the apprehension of non-economic loss such as some breaches of confidence, and other special cases such as antisuit actions) injunctions are granted in order to protect a plaintiff from loss which would sound in damages, not from loss which would not sound in damages." (p692)
v Ethicon Ltd [1975] AC 396, 406, where he said:
"The object of the interlocutory injunction is to protect the plaintiff against injury by
The purpose of an interlocutory injunction therefore is protection, not just against "loss which would sound in damages", but against violation of any right where damages would not be adequate compensation. An obvious example of the need for that wider formulation is the case of trespass to land. A landowner whose title is not disputed is normally entitled to an injunction to restrain trespass on his land, even if the trespass does not harm him (see Patel v W.H. Smith (Eziot) Ltd [1987] 1 WLR 853, 858F). With great respect to Robert Walker J, therefore, I think that the passage in Peaudouce may be too narrowly stated. I also think he would have been surprised by the use sought to be made of it by Mr Watson.
Sir Christopher Staughton: