Commonwealth can still sue on the undertaking as to damages

The High Court has refused Sanofi and Wyeth special leave to appeal the Commonwealth’s claims on the clopidogrel undertaking as to damages.

You may recall that, when Sanofi and Wyeth got interlocutory injunctions to stop Apotex entering the market with a clopidogrel product, Sanofi had to give the “usual undertaking as to damages“. The patents, however, were held invalid.

Sanofi and Apotex settled the latter’s claim for damages. However, the Commonwealth also brought a claim against Sanofi and Wyeth under the undertakings as to damages, in broad terms claiming as damages the difference between the (higher) price it paid under the Pharmaceutical Benefits Scheme while the injunctions were in force and the lower price that would have applied if the interlocutory injunctions had not kept Apotex out of the market.

Last year, the Full Federal Court rejected Sanofi’s and Wyeth’s arguments that the Commonwealth could not bring a claim under the undertakings. Lauren John, an associate at Allens, reports that the High Court refused Sanofi’s application for special leave last week.

Links to the High Court dispositions here (Sanofi) and here (Wyeth). Ms John provides more detail here.

If you have a question or wish to make a comment, feel free to post it in the comments box or send me an email.

Commonwealth seeks $60 million on the undertaking as to damages

Sanofi sued Apotex (then known as GenRx) for infringement of its “clopidogrel patent”. It obtained interlocutory injunctions against Apotex against the sale of Apotex’ product and preventing Apotex from applying to list its product under the Pharmaceutical Benefits scheme (PBS). As a condition of the grant of those interlocutory injunctions, Sanofi gave the “usual undertaking as to damages”:

“(a)          submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person whether or not a party, adversely affected by the operation of the interlocutory injunction or any continuation (with or without variation); and

“(b)          pay the compensation referred to in subpara (a) to the person or persons there referred to.”

Sanofi won at trial, but lost on appeal with the Full Court ordering its patent be revoked. Sanofi’s application for special leave to appeal to the High Court was refused on 12 March 2010.

Apotex sought compensation under the undertaking by motion in May 2010. Sanofi and Apotex resolved that application by negotiation.

The Commonwealth also sought compensation under the undertaking as to damages by application made in April 2013. If we did not know before, we now know the Commonwealth is seeking $60 million. Essentially, the Commonwealth contends that is how much less it would have had to pay out under the PBS if the interlocutory injunctions had not prevented Apotex applying to list its product under the PBS:

 

“The Commonwealth has provided some particulars of its damages. It alleges it has suffered financial loss in excess of $60 million as a result of Apotex being prevented by the various interlocutory orders and undertakings from achieving a listing for its clopidogrel products under the PBS. Most of the Commonwealth’s loss is said to flow from statutory price reductions and price disclosure reductions that would have occurred had Apotex not been the subject of the relevant interlocutory restraints.”

 

The case is a long way off resolution. Nicholas J has allowed Sanofi to amend its points of defence to the Commonwealth’s claim to rely on the Commonwealth’s delay in making its application for compensation and to rely on infringement of copyright in Sanofi’s product information documents. Sanofi will be required to particularise the prejudice its claims it suffered as a result of the delay.

Nicholas J however refused leave to amend to plead that the Full Court’s decision invalidating Sanofi’s patent was wrong in light of the Full Bench’s subsequent decision in AstraZeneca (rosuvastatin). That would be inconsistent with res judicata and the principle of finality of litigation.

Commonwealth of Australia v Sanofi-Aventis [2015] FCA 384