EWCA Affirms Record £27 Million Award for Wrongly Issued Interim Injunction

The judgment of the England and Wales Court of Appeal (EWCA) in AstaZeneca AB v. KRKA came down yesterday and is available here (hat tip to Norman Siebrasse for calling it to my attention).  Last year I mentioned the Patents Court decision from which this appeal arose (see here).  The issue is one of damages for a wrongly issued preliminary injunction.  As I noted in this 2013 blog post, in many countries (including all the member states of the E.U., who are bound by the 9(7) of the Enforcement Directive), when a preliminary injunction is granted but subsequently is revoked, or the defendant is found not to have infringed the IP right in suit, the defendant is entitled to compensation for the losses it suffers while the injunction is in place.  (By way of contrast, in the U.S. the defendant's damages are capped by the amount of the bond the plaintiff was required to post in order to obtain the injunction.)  Anyway, as I wrote last year, in January 2014 Patents Court Justice Sales     

went through a very careful analysis to determine the framework for awarding damages to KRKA from having its generic drug excluded from the market as a result of a preliminary injunction involving a patent that was later held not to infringe another generic manufacturer's drug.  As a result of the decision in this other case, the preliminary injunction against KRKA was lifted in July 2011; but it was still a couple of months before KRKA was able to enter the market, by which time (or shortly thereafter) there were other generic copies of the same drug on the market.  The court concluded that in the but-for world in which the preliminary injunction had not issued, KRKA would have enjoyed a first-mover advantage which is now lost, and should be compensated accordingly.  The court directed the two parties' experts to reach an agreement on the amount owed, following the court's discussion of the appropriate framework.

Ultimately the judge awarded damages in excess of £27 million, based on his conclusion that the defendants would have been able to establish a foothold by convincing national health service authorities in the U.K. to approve the switch to the generic version of the drug and to convince doctors to prescribe it, and thus would have enjoyed a temporary 80% market share (discounted by an 20% probability that this might not have happened).  Yesterday's opinion goes through Justice Sales's factual determinations and, ultimately, rejects all of AstraZeneca's challenges to them (including the challenge to the 20% discount, which AstraZeneca argued was arbitrary, see paras. 79-84).  According to the court, this "is said to be the largest award ever made by the Patents Court upon an inquiry of this kind" (para. 1).

There is also a write-up of the case on today's PatLit Blog.

Update:  A write-up is also available on IPKat here.