Napp Pharmaceutical Holdings Ltd v Dr Reddy's Laboratories (UK) Ltd & Ors, Court of Appeal - Patents Court, June 08, 2017, [2017] EWHC 1433 (Pat)

Resolution Date:June 08, 2017
Issuing Organization:Patents Court
Actores:Napp Pharmaceutical Holdings Ltd v Dr Reddy's Laboratories (UK) Ltd & Ors

Neutral Citation Number: [2017] EWHC 1433 (Pat)

Claim No: HP-2016-000013




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Date: 08/06/2017



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Transcript of the Shorthand and Stenographic Notes of Marten Walsh Cherer Ltd.,

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MR. JAMES SEGAN (instructed by Powell Gilbert LLP) for the Claimant / Respondent

MS. ANNA EDWARDS-STUART (instructed by CMS Cameron McKenna Nabarro Olswang LLP) for the Defendant / Applicant

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  1. This is an application based on a Request for Further Information in an enquiry as to damages on a cross-undertaking. The position is that the patentee (Napp Pharmaceutical Holdings Limited) brought a claim for patent infringement and an interim injunction against, among others, Sandoz Limited, relating to buprenorphine transdermal patches. A cross-undertaking was given and the matter was dealt with on an expedited basis. It began in early 2016 and by 1st August 2016 the first-instance trial, which Napp lost, and the appeal, which Napp also lost, had been completed. The injunction was discharged.

  2. An enquiry on the cross-undertaking was ordered on 13th July but was stayed pending the appeal. As I said, the appeal came to an end on 1st August, although at that stage the Court of Appeal had given their decision but indicated their reasons would follow. The reasons came on 1st November. Sandoz have brought the application for damages, as they are entitled to do.

  3. The Points of Claim plead out Sandoz's case as to why it is entitled to damages. The sum claimed is of the order of £100 million. That is a lot of money. Napp make the point that it is more than the annual value of the market but the answer from Sandoz is that the damages are not claimed simply for one year's sales or even for six months' sales. Sandoz's case is that the effect of being kept out of the market for six months has led to permanent effects on the market from Sandoz's point of view and losses which run into the future. Aggregating them all together comes to the figure of about £100 million. Sandoz's argument is a familiar argument in these circumstances and there is nothing inherently wrong with it in principle. It will depend on the facts.

  4. The response to the Points of Claim from Napp was to file a lengthy request for further information, which Sandoz criticised. There is some force in Sandoz's criticism in that the Request for Further Information was too long and too broad. However, in my judgment Napp were right that the Points of Claim were fundamentally lacking in critical information which Napp were entitled to, and which should have been provided in the first place. That information is the profit margin and price which the claimant on the cross-undertaking (Sandoz) contends they would have been charging for the relevant products. The damages claimed are essentially the difference in profit earned in the actual situation and what would have been earned in a counter-factual situation. The counter factual situation is one in which Sandoz would have launched when they planned to. The point is that the injunction prevented them from doing this.

  5. The Points of Claim go into some detail to explain how the market itself would change in terms of volume over time. In that respect they are not far from being adequate, although it is fair to say that the manner in which the calculations are actually done is not explained. The market consists of a collection of different sizes of transdermal patch. Although the Points of Claim treats the growth rates of most size of patch in the same way, there is also a 15 microgram patch whose pattern of sales will be different because it was only launched in March 2017. At least for that reason it is not obvious on the face of the numbers how the overall figures for the market over time have been generated. One of the questions that Napp asked was to extract that information from Sandoz, in other words to find out what the calculations actually are.

  6. It was explained by counsel for Sandoz in the course of her submissions that when one looks carefully at what is said in the Points of Claim you can work out how the annexed calculations have been done. I am not 100% certain that I followed the explanation completely, but I can see that it is probably close to being right. Nevertheless, the reader of the Points of Claim should not have had to work that out in that way. It is something which could and should have been explained in more detail. Napp were entitled to asked the question.

  7. Much more significant, however, is that the Points of Claim are entirely lacking on any explanation of how the damages claimed are derived from the figures for sales volumes. There is simply a statement that profit margin will remain constant in certain circumstances, and then a statement that by applying the profit margin (unspecified) to the volume data in certain ways a result is produced.

  8. It is said that using the calculations that have been provided one could back calculate from the total loss claimed a form of blended lost profit figure. That blended figure would not be a profit margin but an absolute sum aggregated over the period. Again, I am not certain I followed that completely but I am prepared to accept it. However such a blended profit figure is not a real profit for an actual product. It would be blended across all the different kinds of products and also, critically, it would be blended among the other group companies who are part of this claim. That is an aspect I have not...

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