Smithkline Beecham Plc & Anor v Apotex Europe Ltd. & Ors

A patentee’s damages are not invariably confined to a reasonable royalty. The patentee may recover all loss caused by the infringement which is not too remote, including loss relating to commercially interchangeable products outside the patent claim.

The jurisdiction to grant an interlocutory injunction is not confined to preventing loss recoverable as damages. The court may protect a property right where damages would not provide adequate protection, although an injunction will be unusual if no damages can be recovered. Where both parties face substantial and unquantifiable loss, the court may preserve the status quo and consider whether a party knowingly allowed the dispute to become urgent.

The claimants owned and exclusively licensed a patent concerning a process for preparing an anhydrate form of paroxetine hydrochloride. They alleged that the defendants’ proposed generic product would infringe claim 11. The defendants disputed infringement and validity, but accepted on appeal that there was a serious issue to be tried.

Jacob J granted an interlocutory injunction restraining sales pending an expedited trial. The defendants appealed. They argued that recoverable damages would be unavailable or confined to a reasonable royalty, that loss to sales of the claimants’ hemihydrate product was too remote, and that the balance of justice favoured allowing market entry.

The central questions were whether those damages arguments precluded interlocutory relief and whether the judge had erred in preserving the status quo.

1. Appeal dismissed unanimously. Aldous LJ delivered the leading judgment. Carnwath LJ agreed and added observations about the protective purpose of interlocutory injunctions. Sir Christopher Staughton agreed without further reasons.
2. Damages for patent infringement are not invariably limited to a reasonable royalty. Patent infringement is a statutory tort. A patentee may recover loss caused by infringement, subject to the ordinary requirements of causation and remoteness. A reasonable royalty will commonly represent the loss of a non-manufacturing patentee, but it is not a universal ceiling. General Tire and Gerber Garments were treated as consistent with that conclusion.
3. The jurisdiction under section 37(1) of the Supreme Court Act 1981 is not confined to preventing loss which would be recoverable as damages. The purpose identified in American Cyanamid is to protect a claimant against violation of a right where recoverable damages would not provide adequate compensation. An injunction protecting a property right will be unusual where damages cannot be recovered, but the absence of recoverable damages creates no absolute bar.
4. Sections 62 and 63 of the Patents Act 1977 did not preclude interlocutory relief. Although section 63(2) restricts damages and costs for infringement of a partially valid patent unless good faith and reasonable skill and knowledge are proved, it does not similarly restrict an injunction against further infringement. The claimants also had a properly arguable case that the specification had been framed with reasonable skill and knowledge. Conflicting expert evidence on that issue could not be resolved at the interlocutory stage.
5. The court rejected any general rule, derived from Polaroid, that loss is too remote unless it concerns sales of goods falling within the patent claim. The patented anhydrate and the claimants’ hemihydrate were, for practical purposes, interchangeable. Loss of hemihydrate sales caused by generic anhydrate sales was therefore arguably recoverable.
6. The judge was entitled to find that damages would be substantial and inadequately quantifiable for both sides. The factors for and against relief were evenly balanced. He could preserve the status quo, take account of the imminent trial, and consider that the defendants knowingly delayed disclosing their intended process and launch. Under Garden Cottage, an appellate court could not substitute its own discretion because no error of law, evidence or principle had been shown.

1. Court of Appeal (Civil Division): The defendants’ appeal was dismissed. The interlocutory injunction remained in force pending trial.
2. Chancery Division: Jacob J granted an interlocutory injunction on 28 November 2002 restraining the defendants’ proposed sales pending trial. No neutral citation for that decision is stated in the judgment.