Napp Pharmaceutical Holdings Ltd v Dr Reddy's Laboratories (UK) Ltd & Ors

In an enquiry on a cross-undertaking in damages, a claimant must plead the essential basis of its loss. That includes the relevant prices, profit margins, calculations and, where several group companies claim, the loss attributable to each claimant. A group-wide presentation cannot replace an entity-specific case. Confidentiality is a reason for suitable protection, not for withholding information needed to plead a responsive case. The court has an unfettered discretion to impose cost budgeting even where the claim falls outside the ordinary value-based regime. The court may instead require costs incurred and future estimates, and revisit budgeting when the issues and likely expenditure are clearer.

The claimant had brought patent infringement proceedings and obtained an interim injunction against, among others, Sandoz Limited in relation to buprenorphine transdermal patches. The injunction was later discharged after the claim and appeal failed. An enquiry on the cross-undertaking followed, with Sandoz and three related companies claiming damages said to be about £100 million.

Napp sought further information about the group companies’ losses, projected sales, prices, profit margins and calculations. The court also considered whether to impose cost budgeting under Civil Procedure Rules 1998, rule 3.12, despite the claim’s value exceeding £10 million. The issues were what information had to be supplied before Napp pleaded its response and whether cost budgeting was presently required.

1. Further information. The Points of Claim were materially deficient because they did not identify the prices and profit margins said to apply in the counterfactual launch and delayed-launch scenarios. A blended figure across products and group companies was inadequate. Sandoz had to provide the information and calculations necessary for Napp to understand and plead to the claim, including the terminal value calculation and the pricing and margin information supporting the total claimed profits (paras [4]-[12], [26]-[31]).
2. Claims by several companies could not proceed merely on a group basis. The relationship between the companies, the loss allegedly suffered by each and the attribution of profits had to be explained. The possibility that a parent could recover loss suffered by a subsidiary did not justify assuming that outcome; the basis had to be pleaded and proved, applying the principle discussed in Gerber v Lectra (paras [15]-[17]).
3. The court refused some requests because the information was already apparent, unnecessary before a responsive pleading, or had been explained in argument. That refusal did not mean the issues could never become relevant later (paras [18]-[24], [27]-[32]).
4. Cost budgeting. The discretion under Civil Procedure Rules 1998, rule 3.12 was unfettered. The fact that a claim was outside the value-based regime created no presumption against budgeting. Cost budgeting was generally a useful case-management tool, and the objection that it necessarily prevented recovery of reasonable and proportionate costs was rejected. However, budgeting was not presently required. After pleadings closed, the parties were to exchange statements of costs incurred and estimates of future costs, with the question of budgeting capable of being revisited at the case management conference (paras [33]-[43]).

First-instance decision on an application for further information and cost-budgeting directions in an enquiry on a cross-undertaking in damages. The judgment records that the underlying patent claim and the appeal had previously been lost by Napp, but gives no citations for those decisions.