Wednesday, July 12, 2017

Two Recent Damages Decisions from Australia

These have both been covered by John Collins on the Kluwer Patent Blog (here and here), so I'll be fairly brief.  In the first decision, Bayer Aktiengesellschaft v. Generic Health Py Ltd [2017] FCA 250, the Federal (trial) Court awarded Bayer Aus$25 million in lost profits against a generic drug manufacturer that had introduced an infringing oral contraceptive product (marketed under the brand name "Isabelle").  Bayer started selling its patented contraceptive under the brand name "Yasmin" in 2002.  (In 2008, it began to reduce production of Yasmin in favor of a product marketed under the name "Yaz," which has a lower dosage of ethinylestradiol.)  In 2012, Generic Health began selling the bioequivalent generic version of "Yasmin," under the brand name "Isabelle."  Bayer sued for infringement, but it also applied for permission to amend its patent.  Later in 2012, the court allowed the amendments (which related to, among other things, dosage and composition).  In 2014, the court ordered Generic Health to cease selling "Isabelle," and a week later Bayer began selling its own generic version of Yasmin under the brand name "Petibelle."  Bayer sought damages for lost profits on lost sales of Yasmin due to (1) sales lost to Generic Health's Isabelle from 2012-14, and (2) Bayer's own sales of Petibelle, which sold for a lower price than Yasmin but which Bayer claimed it would not have introduced but for the introduction of Generic Health's product.  The defendant argued, first, that under section 115(1) of the Australian Patent Act Bayer couldn't recover damages for the period of time preceding its amendment of the patent, which states that "Where a complete specification is amended after becoming open to public inspection, damages shall not be awarded, and an order shall not be made for an account of profits, in respect of any infringement of the patent before the date of the decision or order allowing or directing the amendment: (a)  unless the court is satisfied that the specification without the amendment was framed in good faith and with reasonable skill and knowledge; or (b)  if the claim of the specification that was infringed is a claim mentioned under subsection 114(1)."  Upon reviewing the evidence, the court concluded that "Bayer has discharged its onus of proving that the unamended claims and specification as a whole were framed in good faith and reasonable skill and knowledge" (para. 186).  Second, Generic Health argued that Bayer hadn't lost one sale for every sale of Isabelle, but upon review of the evidence the court concluded that Bayer had proven that it had.  Third, Generic Health argued that Bayer couldn't recover the losses caused by its own introduction of a generic version of Yasmin, but the court disagreed, concluding that "but for the infringement, Bayer would not have introduced the lower priced Petibelle" (para. 310).  "Bayer's concern was that Isabelle had disrupted the market possibly introducing a price sensitivity that would not have existed but for Isabelle" (para. 300).  Finally, the court agreed with Bayer's expert on the issue of the deductible costs ("costings"), and held that Bayer was entitled to prejudgment interest based on its pre-, not post-, tax damages.

The other case is Coretell Pty Ltd v Australian Mud Company Pty Ltd [2017] FCAFC 54.  The principal remedies issue of interest is whether the owner of an "innovation patent"--Australia's version of a utility model--can recover damages for the period of time prior to the innovation patent being "certified."  As I mentioned in another recent post, in countries that offer utility model protection applications are examined for compliance with formalities, after which the utility model is granted; but if the applicant seeks to enforce the utility model in court, she will either first have to submit it to a full-blown substantive examination or at the very least its validity will be subject to third-party challenge.  For discussion in my book, see pp. 16-17, 172, 237-38, 301, 338-41, 363-64.  Anyway, under the Australian system (which was amended in 2001, prior to which Australian utility models were called "petty patents") the innovation patent is granted after a formal examination but is not enforceable unless and until it is "certified" by the Commissioner of Patents, following a substantive examination.  The ultimate holding of the court in Coretell (in another opinion by Justice Jagot) is that there is no remedy for the infringement of an innovation patent prior to grant (and subject to certification), even though, as in many countries, the owner of a standard patent can sometimes recover damages for unauthorized pre-grant use, as in the Canadian Dow v. Nova case (see here and here).

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