SmithKline Beecham Plc v Apotex Europe Ltd
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Lewison |
| Judgment Date | 26 July 2005 |
| Neutral Citation | [2005] EWHC 1655 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC02C03101 |
| Date | 26 July 2005 |
[2005] EWHC 1655 (Ch)
Mr. Justice Lewison
Case No: HC02C03101
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Andrew Waugh QC, Mr. Marcus Smith Dr. Justin Turner & Mr. Geoffrey Pritchard (instructed by Messrs. Simmons & Simmons) for the Claimants
Mr. Antony Watson QC, Mr. Alain Choo Choy & Mr Thomas Mitcheson (instructed by Taylor Wessing) for the Defendants
Hearing dates: 15 th, 18 th & 19 th July 2005
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
| Introduction | 2 |
| Background | 3 |
| Procedural history | 4 |
| The issue | 6 |
| The test | 6 |
| The slip rule | 7 |
| The rule | 7 |
| The argument | 7 |
| The development of cross-undertakings | 8 |
| The existence and extent of a cross-undertaking | 8 |
| Imposition of a cross-undertaking | 12 |
| Nature of the cross-undertaking | 13 |
| The benefit of the cross-undertaking | 14 |
| Protection of third parties | 15 |
| The introduction of the CPR | 16 |
| The scope of the slip rule | 18 |
| The joinder application | 20 |
| Estoppel by convention | 21 |
| Restitution | 22 |
| Third party loss | 23 |
| The profit share | 25 |
| Result | 25 |
Introduction
I have to decide three applications. The first is an application to amend a "cross-undertaking in damages" embodied in two orders for interim injunctions. The application is made under the slip rule. The second is to join additional parties to the action in which the interim injunctions were granted, with the objective of giving those additional parties the benefit of the cross-undertaking, with retrospective effect. The third is an unusual application. I have to decide whether certain parts of a draft pleading, if served in the form in which they currently are, would be liable to be struck out as disclosing no reasonable cause of action; or plead a claim that has no reasonable prospect of success.
The third application comes about because of an order made by Pumfrey J on 26 May 2005 on the claimants' application for the trial of a preliminary issue. The order provides:
"The Claimants' application for the hearing of the preliminary issues be refused and instead it be directed that the question of whether the case as pleaded in the draft amended Points of Claim raises triable issues in relation to the two Canadian companies (Apotex Inc. and Apotex Pharmachem Inc.) is to be determined according to the criteria under CPR Parts 3.4 and 24 at the hearing currently listed for 3 days floating from 14 th July 2005 all other directions in the enquiry to await determination of these issues."
In paragraph 31 of the judgment that led to the making of that order Pumfrey J said that he was satisfied that the purely legal argument that would have to be advanced "on the basis that all the facts pleaded are true" would take three days.
Background
The two claimants in the action are members of the GSK group of companies. They manufacture a pharmaceutical product under the brand name Seroxat. It is widely used for the treatment of psychiatric disorders such as depression; and is one of GSK's best selling products. The active ingredient in Seroxat is paroxetine hydrochloride anhydrate. GSK is the proprietor of a patent which claims a process for producing paroxetine hydrochloride anhydrate substantially free of bound organic solvent. GSK had (as one might expect) been protective of their patent. In the two years preceding the current litigation GSK had sought and obtained interim injunctions against two generics companies (Generics (UK) Ltd and Alpharma Ltd) restraining alleged infringements of the patent.
The immediate background to the current proceedings was described by Mr Reilly of GSK in his witness statement as follows:
"7.1 The First Defendant ("Apotex") is an affiliate of Apotex Inc., a multinational generic pharmaceutical company with headquarters in Canada. The Second Defendant ("Neolab") is a UK-based distributor of generic pharmaceutical products. The Third Defendant ("Waymade") is a parallel importer of branded pharmaceutical products and a distributor of generic pharmaceutical products.
7.2 In mid-November 2001 it came to GSK's attention that Neolab had announced an intention to sell a generic paroxetine product in the UK. GSK instructed Simmons & Simmons to write to Neolab and, after some correspondence between solicitors, on 28 November 2001 Neolab gave an undertaking through its solicitors not to launch any product containing paroxetine hydrochloride without giving GSK three weeks' advance notice. In late August 2002 it came to GSK's attention that a marketing authorisation for paroxetine 20mg tablets had been granted to Apotex on 30 July 2002, with Neolab named as a distributor of the product. For the reason given in paragraph 8.9 below, this means that Apotex must have applied for its UK authorisation by January 2002. Copies of Apotex's patient information leaflet and Summary of Product Characteristics are now produced to me marked MR-3.
7.3 On 29 August 2002 Simmons & Simmons wrote to Apotex and the solicitors who had earlier represented Neolab, requesting confirmation that the undertakings previously given by Neolab would be adhered to and requesting samples of the product which Apotex intended to market through Neolab. On 06 September solicitors on behalf of Neolab and Apotex confirmed that the undertaking previously given by Neolab would be adhered to by both their clients. On 09 October 2002 the solicitors gave notice on behalf of Apotex and Neolab, as well as on behalf of Waymade,, of their joint intention to launch a paroxetine hydrochloride product in three weeks' time i.e. on 30 October 2002. GSK were also notified of the commencement of proceedings by the Defendants for the revocation of the anhydrate patent and EP (UK) 0 223 403 (which covers paroxetine hydrochloride hemihydrate)."
The revocation proceedings were in fact begun on 9 October 2002. In response, GSK began its own proceedings alleging infringement of its patented process. GSK applied in its own proceedings for interim injunctions restraining the defendants from disposing of, or offering to dispose of, any pharmaceutical preparation containing paroxetine hydrochloride anhydrate in the United Kingdom. The three defendants to those proceedings were Apotex Europe Ltd; Neolab Ltd and Waymade Healthcare plc. They were also the three claimants in the revocation proceedings.
In fact the paroxetine was manufactured in Canada by Brantford Chemicals Inc (which is now called Apotex Pharmachem Inc and is part of the Apotex group); and some of the finished product was to be supplied by Apotex Inc (another part of the group) to Neolab. The terms of the supply agreement were such that the price that Neolab were to pay Apotex Inc consisted of a fixed price and a percentage share of profit.
Neither Brantford Chemicals Inc nor Apotex Inc (which I shall call "the Canadian companies") were claimants in the revocation proceedings or formal defendants in the infringement proceedings. Nor did the interim injunction prohibit the manufacture of paroxetine in Canada; or its import into the United Kingdom (so long as it was not disposed of or offered for disposal).
Procedural history
The first hearing of GSK's application was disposed of on 29 October 2002 before Jacob J on the basis of undertakings and cross-undertakings. The defendants undertook that they would not until the determination of GSK's application or further order whether acting by themselves or through their employees, directors or agents or otherwise howsoever dispose or offer to dispose of, any pharmaceutical preparation containing paroxetine hydrochloride in the United Kingdom. In return GSK gave a cross-undertaking in the following terms:
"AND UPON the Claimants (and each of them) undertaking by their Counsel to comply with any order this court may make if the court later finds that the undertaking recorded in the following paragraph has caused loss to the Defendants and decides that the Defendants should be compensated for that loss"
On 28 November 2002 Jacob J granted an injunction in substantially the same terms as the undertaking until trial or further order. This time GSK's cross-undertaking was in the following terms:
"AND UPON the Claimants agreeing to comply with any order this court may make if the court later finds that this order for an injunction has caused loss to the Defendants and decides that the Defendants should be compensated for that loss"
The trial of the action resulted in a judgment of Pumfrey J given on 8 December 2003. He dismissed the action and revoked the patent. On the handing down of the judgment Pumfrey J continued the injunction until the effective hearing of a further application on the following cross-undertaking:
"AND UPON the SmithKline Beecham Parties undertaking to comply with any order this court may make if the court later finds that the order for an injunction in paragraph 1 of this Order has caused loss to the Apotex Parties and decides that the Apotex Parties should be compensated for that loss"
The "Apotex Parties" were...
To continue reading
Request your trial
-
PT Ventures, SGPS, S.A. v Vidatel Ltd
...in ( Markos v Goodfellow No. 2 [2002] EWCA Civ. 1542 (11th October 2002)) and ( Smithkline Beecham Plc. v Apotex Europe Ltd. [2005] EWHC 1655 (Ch.))”. 111 Rawlings JA continued at paragraph [23]: “[23] It is not always easy, however, to determine what constitutes an accidental slip or omi......
-
Pt Ventures, Sgps, S.A. v Vidatel Ltd
...in ( Markos v Goodfellow No. 2 [2002] EWCA Civ. 1542 (11th October 2002)) and ( Smithkline Beecham Plc. v Apotex Europe Ltd. [2005] EWHC 1655 (Ch.))”. 111 Rawlings JA continued at paragraph [23]: “[23] It is not always easy, however, to determine what constitutes an accidental slip or omi......
-
Dr Reddy's Laboratories (UK Ltd) v Warner-Lambert Company LLC
...cases…” 49 Only the parties identified in the order as beneficiaries of the cross-undertaking are entitled to sue upon it: SmithKline Beecham PLC v Apotex Europe Ltd [2007] FSR 6, per Jacob LJ at 50 In Les Laboratoires Servier v Apotex Inc [2008] EWHC 2347, Norris J (having set out the prin......
-
Abbey Forwarding Ltd ((in Liquidation)) v HM Revenue & Customs
...made above about the nature of an interim injunction being "wrongly" granted was very clearly explained by Lewison J in SmithKline Beecham plc v Apotex Europe Ltd [2005] EWHC 1655 (Ch); [2006] 1 WLR 872 at [44]: "There is another piece of judicial shorthand which also requires some explana......
-
Table of cases
...HCJ) ........................................................................... 55 Smithkline Beecham Plc v Apotex Europe Ltd (No 3), [2006] 1 WLR 872 (Ch D) ............................................................................. 67 Smoling v Canada (Ministry of Health and Welfare) (......
-
Interlocutory Injunctions: General Principles
...v Evans of Robb Evans & Associates (2010), 264 ALR 1 at para 14 (HCA) [ Evans ]. 170 Smithkline Beecham Plc v Apotex Europe Ltd (No 3) , [2006] 1 WLR 872 at para 43 (Ch D), [2006] 4 All ER 1078 at para 29 (CA), although the terms of the original undertaking should specify that it covers thi......