SmithKline Beecham Plc v Apotex Europe Ltd

JurisdictionEngland & Wales
JudgeLord Justice Aldous,Lord Justice Carnwath,Sir Christopher Staughton,Lord Justice Jacob,Lord Justice Moore-Bick,The Chancellor of the High Court
Judgment Date23 May 2006
Neutral Citation[2006] EWCA Civ 658,[2003] EWCA Civ 137
Docket NumberCase No: A3/2005/1978 and 1986,Case No: A3/2002/2520
CourtCourt of Appeal (Civil Division)
Date23 May 2006
Between:
(1) Smithkline Beecham Plc
(2) Glaxosmithkline (Uk) Limited
Claimants/Respondents
and
(1) Apotex Europe Limited
(2) Neolab Limited
(3) Waymade Healthcare Plc
Defendants/Appellants

[2003] EWCA Civ 137

Before:

Lord Justice Aldous

Lord Justice Carnwath and

Sir Christopher Staughton

Case No: A3/2002/2520

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM CHANCERY DIVISION

MR JUSTICE JACOB

Mr Antony Watson QC, Mr Colin Birss and Mr Tom Mitcheson (instructed by Taylor Wessing) for the Appellants/Defendants

Mr Andrew Waugh QC, Mr Justin Turner and Mr Geoffrey Pritchard (instructed by Simmons & Simmons) for the Respondents/Claimants

Lord Justice Aldous
1

By an order dated 28th November 2002 Jacob J granted an interlocutory injunction preventing the sales by the defendants of a drug pending trial of the action.

2

The claimants in the action are 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.

3

The patent is concerned with a particular form of the known pharmaceutical paroxetine hydrochloride which is sold by SB in the hemihydrate form under the trade mark "Seroxat". It is a well-known antidepressant which generates about 10% of the pharmaceutical sales of SB. The patent is concerned with the anhydrate form. It is entitled "Paroxetine hydrocholoride anhydrate substantially free of bound organic solvents."

4

In other proceedings the patent was attacked by BASF. After hearing evidence, Pumfrey J decided in his judgment of 12th July 2002, that the patent was partially invalid. However he held claim 11 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.

5

Claim 11 is for "a process for the preparation of paroxetine hydrochloride anhydrate substantially free of bound organic solvent which comprises displacing the solvated solvent or solvents from a paroxetine hydrochloride solvate using a displacing agent." It is that claim that SB contend will be infringed by 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.

6

The judge held that there was a serious issue to be tried on infringement and on appeal 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.

7

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.

8

That submission is wrong. A patentee is entitled to recover damages for loss caused by the infringement provided that they are not too remote. In cases where the patentee is not a manufacturer, the patentee will normally only be able to establish that he has lost that which he would have charged for use of his invention, namely a reasonable royalty. General Tire was such a case. But that does not mean that infringement may not cause a patentee loss exceeding a reasonable royalty. The extent of recovery will depend upon the facts and the normal considerations of causation and remoteness.

9

That was made clear by the Court of Appeal in the Gerber Garments case. As Staughton LJ said at page 452:

"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) vol. 12 para 1128 and following, to establish the elementary rules (i) that the overriding principle is that the victim should be restored to the position he would have been in if no wrong had been done, and (2) that the victim can recover loss which was (i) foreseeable, (ii) caused by the wrong, and (iii) not excluded from recovery by public or social policy. The requirement of causation is sometimes confused with foreseeability, which is remoteness. The two are different —see Halsbury para 1141:

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 v. York Montague Ltd. [1996] 3 W.L.R. 87 (aka the Banque Bruxelles case) at pages 92-l94:

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.

…"

10

Staughton LJ went on to consider the case law and then said:

"Viewing the cases as a whole, I cannot find any rule of law which limits the damages for infringement in a patent case in such a way as to exclude the loss claimed by the patentees in the present case. In General Tire & Rubber Co. Ltd v. Firestone Tyre & Rubber Co. Ltd. [1976] R.P.C. 197 at page 214 Lord Wilberforce approved a passage in the judgment of Fletcher Moulton L.J. in the Meters case which concluded:

"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. v. Pott, Cassels & Williamson (1914) 31 R.P.C. 104 at pages 116 and 117 the House of Lords sanctioned damages for "accessories, extensions, repairs etc," and for "machines and frames". Secondly, the recent United States cases of Rite-Hite Corp. v. Kelley Co. Inc. [1996] F.S.R. 469 including the dissenting opinions, and King Instruments Corporation v. Perego (1995) (but decided after Rite—Hite) 65 F 3rd 941 72 F 3rd 855 are certainly interesting; and provide support for each side in the present dispute in some degree. But I do not think that we can rely on them as solving the problem in our courts."

11

Mr Watson QC, who appeared for 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.

12

Mr Watson went on to submit that as damages would...

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