Sandoz AG & Ors v Bayer Intellectual Property GmbH & Ors

Compensation under a cross-undertaking following an invalid interim injunction is assessed liberally because the counterfactual may be inherently uncertain. The court may make assumptions or presumptions favourable to the claimant where the injunction caused the evidential difficulty.

That approach is not enlarged by alleged dishonesty or wrongdoing in obtaining or asserting the patent, unless those matters have a demonstrated nexus with the uncertainty or loss being assessed. A pleading relying on such allegations must therefore show a real prospect of affecting the damages assessment. Allegations that would add substantial cost and complexity may also be refused where the proposed case has no real prospect of success.

The claimants sought damages under cross-undertakings given by the defendants when obtaining interim injunctions concerning rivaroxaban. The patent was subsequently held invalid.

The claimants applied to amend their Points of Claim to allege that the defendants had dishonestly obtained and asserted the patent and that this wrongdoing justified a more liberal assessment of loss, including favourable assumptions about the counterfactual. The defendants opposed the amendment and applied to strike out the equivalent pleading in the Points of Reply.

The central issue was whether the proposed allegations had a real prospect of affecting the assessment of compensatory damages.

1. The application to amend the Points of Claim was refused, and the defendants’ application concerning the Points of Reply was allowed. The proposed case had no real prospect of success.

2. The principle of liberal assessment applies to an inquiry under a cross-undertaking. The claimant retains the burden of proving loss, but the court should recognise that the counterfactual may be inherently imprecise and should avoid over-eager scrutiny or minute criticism of methodology. This follows the approach discussed in Les Laboratoires Servier v Apotex Inc, AstraZeneca v KRKA dd Novo Mesto and Fiona Trust & Holding Corp.

3. Where uncertainty in quantifying loss results from the defendant’s conduct, the court may make assumptions or presumptions favourable to the claimant. The principle is illustrated by Armory v Delamirie and the authorities discussed in Browning v Brachers, Keefe v The Isle of Man Steam Packet Company, Fearns v Anglo-Dutch Paint & Chemical and Yam Seng v International Trade Corporation.

4. Those principles did not make the alleged conduct relevant here. The uncertainty about the number of generic launches, pricing and market reduction arose from the need to construct the counterfactual after interim injunctions had been granted on a patent later held invalid. The defendants’ alleged conduct before the European Patent Office, and their state of mind when seeking the injunctions, could not affect that uncertainty without a demonstrated causal nexus.

5. Ratcliffe v Evans did not assist the claimants. Read in context, it concerned the certainty required to prove damage in a malicious falsehood claim and established no additional relevant principle.

6. Permitting the allegations would substantially increase disclosure, evidence, cost and court resources. The pleaded allegations could not properly be introduced merely to support a possible future costs order.