Sandoz Ag v Bayer Intellectual Property GmbH

Hearing date: 22 July 2025

Approved Judgment

I direct that no official shorthand note shall be taken of this judgment and that copies of the version as handed down may be treated as authentic.

This judgment was handed down at 10.30 am on 1 September 2025 by circulation to the parties' representatives by email and release to The National Archives.

The Deputy Judge:

This is an application by the Inquiry Defendants (“Bayer”) to strike out, or for summary judgment in respect of, a claim by the Inquiry Claimants (“Sandoz”) for an account of profits under cross-undertakings given by Bayer when obtaining interim injunctions against Sandoz.

Background

Bayer was the proprietor of a patent for the compound rivaroxaban (sold by Bayer under the name Xarelto) and an SPC based on that patent which expired on 1 April 2024. It was also the proprietor of EP(UK) 1845961 (“the Patent”) which covered the use of rivaroxaban once daily. The Patent was granted on 22 April 2015 and was due to expire on 18 January 2026. Oppositions to the Patent were rejected by the Technical Board of Appeal of the EPO on 27 October 2021.

In October 2022 Sandoz commenced proceedings for revocation of the Patent. That claim, together with claims by other generic pharmaceutical companies, was tried before HHJ Hacon in February 2024. After trial, but before judgment was handed down, Sandoz and other companies indicated their intention to launch once-daily rivaroxaban in the UK on expiry of the SPC, i.e. on 2 April 2024. Bayer sought interim injunctive relief against Sandoz and the other companies, which was granted by HHJ Hacon for reasons given in his judgment of 27 March 2024: [2024] EWHC 711 (Pat).

The order made by HHJ Hacon on 27 March 2024 contained a cross-undertaking by Bayer in the following terms:

“If the Court later finds that this Order has caused loss to any of the First to Seventh, Ninth and Tenth Respondents or any of their respective Group Companies (as defined below) and decides that any such respondent (or their respective Group Company) should be compensated for that loss, [Bayer] will comply with any Order the Court may make and will be jointly and severally liable for any monetary award relating to such loss.”

Sandoz AG and Sandoz Limited were the Sixth and Seventh Respondents and Hexal AG and Salutas Pharma GmbH were Group Companies.

On 12 April 2024 HHJ Hacon handed down his trial judgment, finding the Patent invalid: [2024] EWHC 796 (Pat). On that date, HHJ Hacon also made an order extending the injunctions until 29 April 2024 to allow Bayer time to seek permission to appeal from the Court of Appeal. That order contained a cross-undertaking from Bayer in materially identical form to that in the order of 27 March 2024.

On 29 April 2024 Arnold LJ granted permission to appeal and extended the injunctions until the conclusion of the appeal. The appeal was heard on 16 May 2024 and at the conclusion of the hearing the Court of Appeal announced that the appeal was dismissed and the injunctions were discharged, and made an order to that effect.

It follows that Sandoz was restrained by the injunctions from dealing in once-daily rivaroxaban for the period from 2 April 2024 to 16 May 2024 and was entitled to seek compensation pursuant to the cross-undertakings given by Bayer.

The Court of Appeal handed down its judgment giving its reasons for dismissing the appeal on 24 May 2024: [2024] EWCA Civ 562. On that date the Court of Appeal made an order including the following provision:

“There shall be an inquiry as to the damages caused to the Respondents as a consequence of the interim injunctions based on the Patent, pursuant to the Appellants' cross-undertakings.”

On 21 June 2024 HHJ Hacon made an order containing directions for service of points of claim and responses thereto in the damages inquiry that had been ordered by the Court of Appeal. Those directions were then stayed by consent pending Bayer's application for permission to appeal to the Supreme Court. Once that application was refused, a revised timetable for directions was agreed.

Sandoz's Points of Claim

On 28 March 2025 Sandoz filed its Points of Claim. That pleading contains a conventional claim for loss of profits as a result of the interim injunctions. It alleges that, but for the injunctions, Sandoz would have supplied rivaroxaban to customers and gives particulars of losses amounting to about £3.9M.

However, the Points of Claim make it clear that the claim for loss of profits is only Sandoz's alternative, fall-back position, and allege that such a remedy would not provide Sandoz with an adequate remedy in the circumstances. The Points of Claim state that Sandoz's principal pleaded case is for an account of the profits that Bayer made as a result of the injunctions.

Paragraph 26 of the Points of Claim says this:

“The assessment of damages under the cross-undertakings … is to be made on the same basis as that on which damages for breach of contract would be assessed if the undertakings had been a contract between [Bayer] and [Sandoz] that [Bayer] would not prevent [Sandoz] from doing that which they were restrained from doing by the terms of the Injunction. On their proper construction, the cross-undertakings therefore permit the Court to make any monetary order that would have been available if the claim under the cross-undertakings was for breach of such contract.”

Paragraph 27 of the Points of Claim alleges:

“The circumstances of this case are exceptional such as would justify an account of profits for breach of contract and accordingly an account of profits under the cross-undertakings.”

As Sandoz's submissions made clear, the reference to the circumstances being exceptional such as to justify an account of profits for breach of contract is a reference to the exceptional remedy for breach of contract identified by the House of Lords in Attorney General v Blake [2001] 1 AC 268.

Particulars of the matters relied on as constituting exceptional circumstances are given in paragraphs 27.1 – 27.10 of the Points of Claim. Paragraphs 27.1 – 27.5 contain an allegation that Bayer obtained the grant of the Patent on the basis of false and misleading claims which it made deliberately and dishonestly. Sandoz's skeleton argument summarised the matters relied on in support of this allegation in this way:

“(1) Bayer dishonestly made false and misleading claims to the EPO on matters relating to the requirements of non-obviousness and inventiveness. Bayer's false claims included understating the half-life of rivaroxaban and making untrue statements as to the results of the Phase I trials and reaction to the suggestion of including a once daily dosing trial in the Phase II trials.

(2) Bayer dishonestly failed to disclose prior art which would have revealed that its claims in support of the Patent were false, including a poster (the “Harder poster”) which reported that the half-life of rivaroxaban was as much as double that which Bayer had claimed in its evidence and argument in the EPO proceedings.”

Sandoz's skeleton argument summarised paragraphs 27.6 – 27.9 of its Points of Claim thus:

“Sandoz's case is that, in addition to Bayer's dishonest behaviour in obtaining the Patent from the EPO…, Bayer acted wrongfully in seeking to defend the validity of the Patent in the English proceedings and obtaining the interim injunctions. The matters which Sandoz relies on in this regard are set out at paragraphs 27.6 to 27.9 of its POC and include the following:

(1) Bayer sought to defend the validity of the Patent despite knowing that the Patent had been obtained from the EPO and maintained by the TBA on the basis of its false claims and misrepresentations as to inventiveness and non-obviousness and deliberate and dishonest failures to disclose prior art.

(2) Bayer applied for and successfully obtained the 27 March and 12 April Injunctions (the “Injunctions”) with the intention of enriching itself by extending its monopoly in respect of rivaroxaban and its ability to obtain higher prices for Xarelto.

(3) Bayer also knew that: (i) the effect of the Injunctions would be to cause irremediable losses and prejudice to generic companies (such as Sandoz) and others (including the NHS, which was not party to the cross-undertakings); and (ii) any compensatory damages exposure to the respondents on the cross-undertakings would be much less than the additional profits available to Bayer as a result of the Injunctions.”

Paragraph 27.10 of the Points of Claim asserts that: “Compensatory damages are inadequate in these exceptional circumstances.” Paragraph 28 is a wrap-up paragraph.

Bayer's application

Bayer's application is to strike out Sandoz's pleaded claim for an account of profits (specifically, the final sentence of paragraph 26 and the whole of paragraphs 27 and 28 of the Points of Claim) pursuant to CPR 3.4(2)(a) or the court's inherent jurisdiction, or for summary judgment on that claim.

Bayer contends that (1) the terms of its cross-undertakings do not permit Sandoz to advance a claim for an account of profits, and (2) even if they do, the circumstances pleaded by Sandoz cannot justify the award...