Eli Lilly & Co v Teva Pharmaceutical Industries Limited

The court should order a preliminary issue only where doing so is just and proportionate in the circumstances. Relevant considerations include whether the issue is decisive or materially narrows the case, the effect on cost and delay, the factual basis required, the risk of fettering the parties or court, the risk of amendment, and the prospects of settlement. The issue must also be defined clearly and in a self-contained form. A preliminary issue should not be used as a short cut where substantially the same disclosure and evidence will still be required.

This was the first case management hearing in a claim concerning damages allegedly due under a settlement agreement relating to the defendant’s marketing and sale of a patented drug combination in Germany. The claimant sought preliminary determination of issues concerning clause 3.4, including whether damages could reflect losses of the claimant’s affiliates and whether German law was relevant to their assessment.

The defendant opposed the application because the proposed issues would not determine the claim, would not materially reduce disclosure or evidence, and would delay the trial. The court also considered disclosure obligations and costs arising from other applications.

1. Application for preliminary issues dismissed. The court exercised its case-management discretion under CPR 3.1(2)(i) and applied the criteria identified in Wagner International AG v Earlex Ltd [2011] EWHC 3897 (Pat), derived from Steele v Steele [2001] CP Rep 106.
2. The proposed issues would not dispose of the claim. Even if determined for the claimant, the court would still need to identify the relevant loss-bearing entities, determine the basis on which losses could be recovered, and quantify the losses. A possible settlement could not substitute for a decisive outcome.
3. The proposed determination was unlikely materially to reduce disclosure, preparation or expert evidence. Detailed information concerning the claimant’s and affiliates’ losses would be required whichever construction prevailed. The German law issue would require at least an assumed statement of relevant German law, with a risk that later evidence would reduce the utility of the decision.
4. The court treated clear definition as an additional consideration. Any preliminary issue should be self-contained and susceptible to a clear answer, as explained in Allied Maples Group Limited v Simmons & Simmons [1995] 1 WLR 1602.
5. Delay, appeal risk, the possibility of amendment, and limited settlement prospects meant that ordering the issues would not be just or right. The court dismissed the application.
6. The court declined to suspend interest. Although it had discretion under section 35A of the Senior Courts Act 1981, that discretion should be exercised by the judge determining the preliminary issue or the full trial, rather than pre-emptively.
7. Disclosure was ordered substantially in accordance with the defendant’s proposals where requests were reasonable and proportionate. Request 14 was refused as irrelevant and disproportionate. Costs orders were made concerning the disclosure, designation and amendment applications.