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Are the public interested in patent infringement? Not according to the supreme court

6 January 2015

In Les Laboratoires Servier & another (Servier) v Apotex Inc & others (Apotex) (see here) the Supreme Court ruled that patent infringement does not engage the public interest. It appears that the “illegality defence”, which relies on harmful effects on public well-being, cannot be used to avoid paying injunctive damages relating to potential patent infringement.

Servier held UK and Canadian patents covering, albeit with differing scopes of protection, a specific crystalline form of the drug perindopril erbumine. In 2006 Apotex began selling in the UK this form of perindopril erbumine, which had been manufactured in Canada.

Servier launched infringement proceedings against Apotex in both countries, rapidly obtaining an interim injunction preventing further import and sale in the UK. A cross-undertaking provided that if the UK infringement proceedings were unsuccessful, Servier would reimburse Apotex’s lost earnings.

The UK patent was ruled to be invalid but, key to the present case, the Canadian patent was declared valid and infringed.

In the UK, the cross-undertaking came into play, providing compensation from Servier to Apotex for lost sales of 3.6 million packs of perindopril erbumine. Servier tried to claim the money back using the “illegality” defence, arguing that Apotex had no right to any profits lost in relation to a product that would have been manufactured illegally in Canada. In reply Apotex argued that the UK injunction had provided Servier with an illegitimate monopoly over Apotex and maintained that it was entitled to damages.

The case passed through the High Court, Court of Appeal and eventually the Supreme Court, with different logic applied by each.

In the High Court, Arnold J was concerned that Apotex’s lost profits would have relied on unlawful manufacture in Canada. Accordingly, Arnold J was of the opinion that the illegality provision did apply and the lost profits had been wrongly awarded.

In the Appeal Court, Apotex conceded that any award should come minus the extent of damages in Canada, as would have been awarded by the Canadian court, for manufacturing and exporting 3.6 million packs worth of perindopril erbumine. Apotex’s alleged “good faith” belief that the Canadian patent was invalid was also considered. This led the Appeal Court to judge that Apotex’s actions were “low on the scale of culpability in terms of the illegality defence”, ultimately finding, contrary to the High Court, that the lost profits were justly awarded.

The Supreme Court came to the same conclusion as the Appeal court, but for different reasons. The Supreme Court was concerned by the fact that the previous two courts had tried to put Apotex’s behaviour on a scale of morality with an uncertain “illegality” boundary. As this is a subjective standard, such precedent was seen to make the law uncertain. Taking a different approach, the Supreme Court focused on established case law, pointing to the fact that the illegality defence could only be applied to cases that engage the public interest. They ultimately ruled that patent infringement, being private rather than public, did not qualify for an illegality defence.

As put by Lord Sumption, “A patent is of course a public grant of the state. But it does not follow that the public interest is engaged by a breach of the patentee’s rights … The only relevant interest affected is that of the patentee, and that is sufficiently vindicated by the availability of damages for the infringements in Canada, which will be deducted from any recovery under Servier’s undertaking in England.

This decision has made it clear that an illegality defence will not be successful in cases concerning patent infringement. If you are considering multi-national infringement proceedings, it will be wise to think carefully before conceding to injunctive cross-undertakings.

Andrew Evitt
Life Sciences & Chemistry group

If you require further information on anything covered in this briefing, please contact Andrew Evitt (aevitt@withersrogers.com; +44 1179 253 030) or your usual contact at the firm.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Withers & Rogers LLP, January 2015