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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Dr Reddy's Laboratories (UK) Ltd & Ors v Warner-Lambert Company LLC & Anor  EWHC 2182 (Ch) (30 July 2021)
Cite as:  WLR(D) 463,  EWHC 2182 (Ch),  Bus LR 1496
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
B e f o r e :
|(1) DR REDDY'S LABORATORIES (UK LIMITED)
(2) ACTAVIS GROUP PTC EHF
(3) ACCORD-UK LIMITED
(formerly Actavis UK Limited)
(4) BALKANPHARMA DUPNITSA AD
(a company registered under the laws of Bulgaria)
(5) ACTAVIS INTERNATIONAL LIMITED
(a company registered under the laws of Malta)
(6) SECRETARY OF STATE FOR HEALTH AND SOCIAL CARE
(7) NHS ENGLAND
(8) THE WELSH MINISTERS
(9) THE DEPARTMENT OF HEALTH, SOCIAL SERVICES AND PUBLIC SAFETY FOR NORTHERN IRELAND
(10) THE REGIONAL HEALTH AND SOCIAL CARE BOARD
(11) THE SCOTTISH MINISTERS
(12-25) THE SCOTTISH HEALTH BOARDS
(26) RANBAXY (UK) LIMITED
(27) SANDOZ GMBH
(28) SANDOZ LIMITED
(29) SANDOZ AG
(30) HEXAL AG
(31) TEVA UK LIMITED
(32) PLIVA HRVATSKA D.O.O
(a company organised and existing under the laws of Croatia)
(33 TEVA API INDIA PRIVATE LIMITED
(a company organised and existing under the laws of India)
(34 TEVA OPERATIONS POLAND SP Z.O.O.
(a company organised and existing under the laws of Poland)
(35) PLUS CHEMICALS, BRANCH OF TEVA PHARMACEUTICALS INTERNATIONAL GMBH
(a company organised and existing under the laws of Switzerland)
- and –
|(1) WARNER-LAMBERT COMPANY LLC
(2) PFIZER LIMITED
Andrew Lykiardopoulos QC and David Scannell QC (instructed by Powell Gilbert LLP) for Actavis and (instructed by Pinsent Masons LLP) for Teva
Philip Moser QC, Brendan McGurk and Alice Hart (instructed by Government Legal Department) for NHS England, Wales and Northern Ireland
Douglas Campbell QC and Ligia Osepciu (instructed by Reynolds Porter Chamberlain LLP) for NHS Scotland
Benet Brandreth QC (instructed by HGF Law LLP) for Ranbaxy
Richard Boulton QC, Charlotte May QC, Tim Goldfarb, Tim Austen and Thomas Lunt (instructed by Kirkland & Ellis (International) LLP) for the Warner-Lambert Company LLC and Pfizer Limited
Hearing dates: 14, 15, 16 and 17 June 2021
Crown Copyright ©
Covid-19 Protocol: This judgment is handed down remotely by circulation to the parties' representatives by email, release to BAILII and publication on the Courts and Tribunals Judiciary website. The date and time for hand-down is deemed to be NB 10:30 AM on 30th July 2021.
Mr Justice Zacaroli:
engaged in marketing generic pharmaceutical products ("Generics"). Upon expiry of EP No. 0 641 330 and the subsequent expiry in July 2014 of data exclusivity for Lyrica, Generics were free to apply, broadly speaking, for a marketing authorisation for pregabalin for use in treating epilepsy and GAD. The parties have used the following terms to refer to different forms of marketing authorisation:
skinny label: marketing authorisation indicated for the treatment of epilepsy and GAD, but not neuropathic pain;
full label: marketing authorisation indicated for the treatment of epilepsy, GAD and neuropathic pain;
intermediate label: marketing authorisation indicated for the treatment of epilepsy, GAD and central neuropathic pain (but not peripheral neuropathic pain).
Interlocutory orders and undertaking
"1. Pregabalin should only be prescribed for the treatment of neuropathic pain under the brand name Lyrica (unless there are critical contra-indications or other special clinical needs e.g. a patient allergic to an excipient, branded product unavailable etc which apply to Lyrica, when you should not prescribe Lyrica or pregabalin).
2. When prescribing pregabalin for the treatment of neuropathic pain to patients you should (so far as reasonably possible):
a) prescribe by reference to the brand name Lyrica; and
b) write the prescription with only the brand name "Lyrica" and not the generic name pregabalin or any other generic brand.
3. When prescribing pregabalin for the treatment of anything other than pain, you should continue to prescribe by reference to the generic name pregabalin.
4. When dispensing pregabalin, if you have been told that it is for the treatment of pain, you should ensure, so far as reasonably possible, that only Lyrica, the branded form of pregabalin, is dispensed. However, when dispensing pregabalin for the treatment of anything other than pain, you are not restricted to dispensing Lyrica."
"If the Court later finds that this Order has caused loss to the Respondent, the Department of Health, the Actavis group of companies, the Teva group of companies or the Dr Reddy's group of companies, and decides that the Respondent, Department of Health, the Actavis group of companies, the Teva group of companies or Dr Reddy's Laboratories (UK) Limited should be compensated for that loss, the Applicant will comply with any order the Court may make."
"If the Court later finds that this Order has caused loss to [Sandoz or any company in the Sandoz group], the Department of Health and/or the National Health Service Commissioning Board and decides that [Sandoz or any company in the Sandoz Group], the Department of Health and/or the National Health Service Commissioning Board should be compensated for that loss, [Pfizer] will comply with any order the Court may make."
"If the Court later finds that the [NHS Guidance Order] has caused loss from 3 October 2015 onwards to [Sandoz or any company in the Sandoz group] .. and decides that [Sandoz or any company in the Sandoz group] should be compensated for that loss from 3 October 2015 ... [Pfizer] will comply with any Order the Court may make."
"If the Court later finds that this Order [i.e. the Sandoz Order of 17 November 2015] has caused loss from 9 February 2016 to [NHS Scotland] and decides that [NHS Scotland] should be compensated for that loss from 9 February 2016, [Pfizer] will comply with any order the Court may make".
The Preliminary Issues
"(a) What are the appropriate counterfactual assumptions over the period from 8 July 2014 (expiry of Pfizer's data exclusivity) to present upon which to determine any damages payable to each of the Inquiry Claimants in the Inquiry Claims?
(b) To what extent (if not already answered at (a)) are findings of fact binding as between different parties in these proceedings?"
"1. Is it correct to assess the counterfactual for each Inquiry Claim on the assumption that the same Threats, Relevant Orders and Undertakings were or were not made across all the Inquiry Claims?
2. Is it correct to assume, as a matter of law, in the counterfactual for each Inquiry Claim that none of the Threats, Relevant Orders and the Undertakings were made, and if not, which of the Threats, Relevant Orders and Undertakings should it be assumed would have been made in the counterfactual for each Inquiry Claim?
3. In determining the amount of damages (if any), is it appropriate to assess the Inquiry Claimants' loss on the assumption that any or all of the claims of the Patent were known by all to be invalid at all relevant times following expiry of Pfizer's data exclusivity on 8 July 2014?
4. Is it correct to assume, as a matter of law, that the Inquiry Defendant could not have restrained prescribers or dispensers from prescribing or dispensing pregabalin for pain and/or restrained generic manufacturers from launching full label products, and if so then (having regard to the chronology) from which date?
5. Is it correct to assume, as a matter of law, that the Inquiry Defendant could not have threatened any parties with patent infringement proceedings and if so then from which date?
6. Is it correct to assume, as a matter of law, that the Inquiry Defendant could not have restrained launch of full label products by Sandoz or other manufacturers and if so then from which date?"
The arguments of the parties in outline
(1) Those Generics whose principal claim is to lost profits which would have been derived from sales of a skinny label product (the "Skinny Label Generics"). This group comprises Actavis and Teva, who were together represented by Mr Lykiardopoulos QC and Mr Scannell QC, and Dr Reddy's, represented separately by Dr Nicholson QC and Mr Hall;
(2) Those Generics whose principal claim is to alleged lost profits which would have been derived from sales of a full label product (the "Full Label Generics"). Following settlement of the claim by Sandoz, this now
comprises only Ranbaxy, represented by Mr Brandreth QC;
(3) The entities that fall under the umbrella respectively of the National Health Service in England, Wales and Northern Ireland ("NHS EWNI"), represented by Mr Moser QC, Mr McGurk and Ms Hart, and NHS Scotland, represented by Mr Campbell QC and Ms Osepciu (together, the "NHS Parties"); and
(4) Pfizer, represented by Mr Boulton QC, Ms May QC, Mr Goldfarb, Mr Austen and Mr Lunt.
The Skinny Label Generics
in the NHS Guidance Order and the Threats. As to Assumptions 1 and 2, they oppose the imposition of a single consistent counterfactual and contend that the appropriate counterfactual must be assessed separately for each Inquiry Claim.
The Full Label Generics
The NHS Parties
"It is compensating for loss for which the defendant "should be compensated" (to apply the words of the undertaking). Labels such as "common law damages" and "equitable compensation"
are not, to my mind, useful. The court is compensating for loss caused by the injunction which was wrongly granted. It will usually do so applying the useful rules as to remoteness derived from the law of contract, but because there is in truth no contract there has to be room for exceptions."
"In a proceeding of an equitable nature it is generally proper to adopt a view which is just and equitable, or fair and reasonable, in all the circumstances rather than to apply a rigid rule. However the view that the damages should be those which flow directly from the injunction and which could have been foreseen when the injunction is granted, is one which will be just and equitable in the circumstances of most cases..."
".it is perfectly clear, and it appears from the words of the undertaking themselves, that the only damage to which a defendant is entitled are those which he has sustained by reason of the grant of the injunction. The generally accepted view is that the damages must be confined to loss which is the natural consequence of the injunction under the circumstances of which the party obtaining the injunction has notice .. In a number of authorities the court has distinguished between loss which was caused by the injunction and loss which arose from the litigation..."
Assumption 3: Assumed knowledge of invalidity?
(1) Leaving aside the question of any other of the orders, undertakings and Threats, if the NHS Guidance Order had not been made, then the decision for each Generic, in determining whether to bring its product to market, would have been made in the context of uncertainty over the validity of the Patent. Risk averse Generics would have been more likely to refrain from doing so, and prices would be less likely to have fallen (and the NHS Parties' damages would be less);
(2) If, however, it is to be assumed that everyone knew the Patent was invalid, then there would have been nothing to stop Generics bringing their products to market, and prices would likely have fallen quickly. The NHS Parties' damages would thus be much greater and practically indistinguishable from damages caused by the existence of the Patent itself.
It is to cater for that possibility that the price of obtaining such an injunction is a cross-undertaking in damages. Neither the application for the grant of the Patent nor the bringing (or defending) of proceedings so as to uphold the validity of the Patent is treated as wrongful in the same sense, and there is no requirement to provide a cross-undertaking in damages in either case. Accordingly, the loss flowing from the wrongly made order (supported by the cross-undertaking) must be distinguished from loss caused by the Patent or the subject matter of the litigation (which is not so supported).
".. .the effect of the order was intended to be, and was likely to be, that prescribers prescribed pregabalin for treating pain by reference to the brand name Lyrica rather than the generic name pregabalin. If prescribers did so, then pharmacists would be obliged to dispense Lyrica rather than generic pregabalin for treating pain. If it turned out that the Patent was invalid, however, then Teva should not have been prevented from making sales of generic pregabalin which pharmacists would otherwise have dispensed for the treatment of pain whether or not Teva would infringe the Patent if it was valid by selling the product under a skinny label."
"If the question goes to arbitration, the arbitrator's duty is to determine the amount of compensation payable. In order to enable him to come to a just and true conclusion it is his duty, I think, to avail himself of all information at hand at the time of making his award which may be laid before him. Why should he listen to conjecture on a matter which has become an accomplished fact? Why should he guess when he can calculate? With the light before him, why should he shut his eyes and grope in the dark?"
Assumptions 1 & 2: A consistent counterfactual that all/none of the other orders were made
interlocutory injunctions against Sigma, Alphapharm and Generic Health (the "Sigma Generics") preventing those companies from launching a generic version of venlafaxine, in respect of which Wyeth held a number of patents, including a method patent. Wyeth provided a cross-undertaking in respect of each injunction. The Sigma Generics challenged the validity of Wyeth's method patent, which was rejected by Jagot J. However, on appeal, that decision was overturned by the Full Court. Special leave to appeal was subsequently refused. Each of Sigma, Alphapharm and Generic Health sought enforcement by the court of the cross-undertakings given by Wyeth for the damage they suffered as a result of the "wrongly" made injunctions.
".. .the notion that it is to be assumed contrary to the fact that the interlocutory injunction was refused let alone that it was refused on the ground that founded the Full Court's orders is irreconcilable with the repeated emphasis in Air Express on the requirement that any compensation relate to the effect of the interlocutory orders, not the litigation. To assume otherwise would effectively remove the majority of the risk which the method patent presented to the generics. If the analysis proceeds on that basis, the inevitable tendency would be to compensate the generics for the existence of the method patent and the litigation which is impermissible."
The parties' submissions in more detail
(1) In considering Actavis' alternative case - based on the Actavis Modified Label Order - the assessment of loss caused by the cross-undertaking should proceed on the assumption that the Actavis Modified Label Order and the Sandoz Orders were not made. That is because if the Sandoz Orders had not been made, it is unrealistic to suggest that anyone would have been injuncted, or given undertakings, preventing them from bringing intermediate label products to market;
(2) Any claim by Ranbaxy under the Ranbaxy Undertaking must similarly proceed on the basis that neither the Ranbaxy Undertaking nor the Sandoz Orders had been made, because it is unrealistic to think that Ranbaxy would ever have given their undertakings if the Sandoz Orders had not be made; but
(3) In contrast, it is not unrealistic that, had the NHS Guidance Order and the Threats not been made, the Sandoz Orders would have been made. Accordingly, it would be wrong to remove the Sandoz Orders from the counterfactual to be constructed on Actavis/Teva's primary case based on the cross-undertaking in the NHS Guidance Order and the Threats.
". if you remove the Sandoz injunction, it is no longer assessing loss caused by the NHS Guidance Order and threats; it is assessing loss by the NHS Guidance Order, threats and the Sandoz injunction..."
(mostly by analogy) their respective contentions. Ultimately, these were of limited assistance in answering the central question raised by this trial of preliminary issues. I address each of the principal cases relied on in turn.
single counterfactual, in which all of the relevant orders, undertakings and threats are removed. That is, as I have noted above, precisely what Jagot J did. Mr Moser relied in particular on the following passages from her judgment:
(1) At , having noted the inter-relationship between the claims of the inquiry claimants, and that the assessment of the degree of probability that one would have sought and obtained a "PBS" listing of their products (under a scheme pursuant to which pharmaceutical products available to be dispensed to patients at a Commonwealth-subsidised price are listed), and when, necessarily affected what other inquiry claimants would have done, said this:
"I made clear to the parties that compensation could not be assessed on the basis of inconsistent hypotheses. There could be disputes about the construction of the applicable hypotheses but, once constructed, the hypotheses must be consistent across all claims. Otherwise no determination of compensation could be just, at least not to Wyeth. To give an example, the generics and the manufacturers/suppliers did not agree about hypothetical supply prices. Because the claims of the manufacturers/suppliers depend on the generics, there cannot be inconsistent hypothesised supply prices between them."
(2) She returned to this point, at  to :
"231. ...Is it necessary or appropriate to disregard the grant of Sigma interlocutory injunction when considering Alphapharm's position had the Alphapharm interlocutory injunction not been granted? And is it necessary or appropriate to disregard the grant of Sigma and Alphapharm interlocutory injunctions when considering Generic Health position had the Generic Health interlocutory injunction not been granted?
232. In my view, these two questions must be answered yes, as otherwise it is not practically possible to construct consistent hypotheses of what would or might have occurred in any case. For example, if when considering Sigma's position it is taken that Sigma would not be subject to the Sigma interlocutory injunction but when considering Alphapharm's position it is taken that Sigma was subject to an interlocutory injunction, then the inevitable consequence is that the hypothesised market for Alphapharm is distorted from the outset. The hypothesised market on this latter approach would contain only Alphapharm when, in fact, it is known that Sigma was and would have been the first to market."
"I have accepted that the final injunctions on 8 November 2010 must represent the date from which no compensation is payable. Those final injunctions, of course, were also wrongly granted but Wyeth's undertakings did not extend to any effect of the final injunctions (and nor logically could they do so given the principles which found the requirement to give the usual undertaking as to damages as the price of interlocutory orders). Unfair as it no doubt appears to the claimants, losses sustained as a result of a wrongly granted final injunction must lie where they fall."
Marex Financial Ltd v Sevilleja
Secretary of State for Transport v Curzon Park Limited
"In the real world, if all four landowners had sold their land at the respective valuation dates without having first applied for planning permission, the market would no doubt have valued each parcel on the basis of hope value. It would be necessary for a purchaser to assess the likelihood of planning permission being granted for that particular parcel of land. The price paid would have reflected that assessment. In the real world more than one landowner could have had a reasonable expectation of the grant of planning permission for rationed development, even though only one of them would have actually achieved that. But what section 14 of the LCA does is to convert a reasonable expectation of planning permission into a certainty. It is not surprising that converting four reasonable expectations of planning permission into four certainties may have the cumulative effect of increasing the overall compensation payable to a level beyond that which would have been achieved in the real world. That, to my mind, is a clear encroachment on or modification of the principle of equivalence (as Mr King accepted), to which the courts are bound to give effect."
orders, undertakings and Threats should stand or fall together in the counterfactual world. They were all aspects of Pfizer's attempt to maintain its monopoly over the supply of pregabalin for treating neuropathic pain. Each attempt to do so turned out to be "wrongful" (in the sense used above) for the same reason - that Pfizer was not entitled to the monopoly it claimed. In assessing the loss caused by those attempts, or any one of them, to each Inquiry
Claimant, therefore, each of its wrongful attempts to enforce the same monopoly should be removed from the counterfactual.
Dr Reddy's primary case
pleading at trial; (3) even if parties are bound by their pleadings in a bilateral case, that does not apply in multi-party proceedings; and (4) if the previous points are wrong, then Pfizer would seek to amend its case post-judgment.
Assumptions 4 to 6
Conclusions on preliminary issue 1(a)
(1) It is correct to assess the counterfactual for each Inquiry Claim on the assumption that the same Threats, orders and undertakings were not made across all Inquiry Claims;
(2) It is correct to assume as a matter of law, in the counterfactual for each Inquiry Claim that none of the Threats, orders or undertakings were made;
(3) The answer to each of the questions raised by Assumptions 3 to 6 is "no".
Preliminary issue 1(b)