Monday, November 10, 2014

Damages Questions from Canada; Quia Timet Injunctions and Groundless Threats in India

1.  Sufficient Description and IPKat have both published posts recently on a U.K. Supreme Court case, Les Laboratoires Servier v. Apotex Inc., [2014] UKSC 55. The main issue in the case is the application in a patent case of the doctrine of "ex turpi causa," which to me sounds similar to the U.S. doctrine of "unclean hands."  I mention the case here, however, because as explained by Professor Siebrasse the facts of the case also give rise to an interesting damages question, which I will stylize as follows.  Suppose that A sues B for patent infringement, involving the same invention, in Country X and Country Y.  Country Y is the place at which B makes the allegedly infringing product, though it distributes it in both Country X and Country Y.  A succeeds in obtaining a preliminary injunction in Country X but not Country Y.  Ultimately, however, the patent is held invalid in Country X but is found to be valid and infringed in Country Y.  In Country X (as in many countries, though not the United States; see my post here) B is entitled to compensation for losses suffered as a result of the wrongly issued preliminary injunction.  How do you measure B's loss?  More specifically, is B entitled to damages for sales it would have made in Country X, even though the subject matter of those sales would have been merchandise that B made in violation of A's patent in Country Y?  On a strictly but-for theory of compensation, the answer appears to be yes, but is that the correct answer given that the manufacture in Country Y would have been infringing?  Should B benefit from the fact that Country Y didn't award A a preliminary injunction?  Should it matter whether B could have made the product without infringing any patents in another country?

I think Professor Siebrasse's analysis of the damages question--that B is entitled to damages for lost sales in Country X, reduced by the damages it would have had to pay in Country Y, but that those latter damages should reflect only the cost savings incurred by manufacturing in Country Y as opposed to some other country where the product was unpatented--is correct in principle, but would be interested in hearing what other readers think.

2.  Along somewhat related lines, Professor Siebrasse also informs me that the Canadian Supreme Court has agreed to hear a case on how to calculate the damages owed to a generic drug company that has been temporarily excluded from the marketplace by virtue of a stay that is subsequently lifted when the generic firm succeeds on the issue of invalidity or noninfringement.  The case is Apotex Inc. v Sanofi-Aventis, 2012 FC 553, leave to appeal granted, SCC 35886.  Professor Siebrasse has previously blogged on the case here, here, here, here, and here.  

3.  Recently I mentioned a post on Spicy IP regarding the denial by a court in Hyderabad, India of a preliminary injunction sought by Bristol, Myers Squibb against Mylan's planned exportation of a generic HIV drug to Venezuela.  Spicy IP has had a couple of other remedies-related posts recently that are worth noting.  First, on September 19, Madhulika Vishwanathan published a post titled Quia timet injunction storm:  Delhi HC grants injunction against Ranbaxy in Glaxus (Vildagliptin), critiquing a recent case in which the Delhi High Court granted a preliminary injunction against a generic drug maker (Ranbaxy) that had not yet entered the market for the brand-name drug, based on an imminent threat of infringement evidenced by Ranbaxy's filing of a petition for revocation of the Novartis patent reading on the brand name drug.  According to the author, in other cases "the standard of proof adopted by the courts for allowing quia timet injunctions was: marketing approvals/ regulatory licenses obtained by generics much ahead of patent expiry," and in the author's view "[a]pplying for patent revocation may also be construed as an act of good faith by the generic company; to have the validity of the patent adjudicated before launching the generic version."  She also contrasts the Ranbaxy matter with a British case, Merck v. Teva, in which the court "opined that the fact that [generic manufacturer] Teva had taken the trouble to obtain marketing approval much ahead of time (22 months)  supports an inference that Teva intended to launch  generic efavirenz before patent expiry. Also Teva’s past at risk launches also worked against them."  Second, relevant to the topic of wrongful patent enforcement, on September 20 Mathews P. George published a post titled Groundless Threat of Infringement Proceedings:  A Comparison Spanning of a Few India IP Legislations.  According to the author, in a groundless threat suit under Indian law "the threatener must prove that the acts in respect of which the proceedings were threatened constitute or, if done, would constitute, an infringement of a patent or of rights arising from the publication of a complete specification in respect of a claim of the specification."  By way of comparison, see my post from August 4, 2014, discussing a recent action for groundless threats under UK law.

4.  Finally, just a reminder that I will be live-blogging a conference on patent remedies at American University tomorrow.  Details here.

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