England and Wales High Court (Patents Court) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		28 November 2002

Mr Justice Jacob:

1. This is an application for an interim injunction to restrain infringement of UK patent number 2,297,550. I will call the claimants SB, nothing turning on the fact that there are two of them. Likewise I will call the defendants Apotex, although there are three of them. The first defendant, Apotex Europe Ltd is the subsidiary of a large private Canadian company whom I shall also include in the term "Apotex".
2. The patent relates to crystalline paroxetine hydrochloride, its preparation and its use as a therapeutic agent. It particularly relates to an anhydrous form. SB sell a different form (the hemihydrate) as a pharmaceutical under the name Seroxat. An application by BASF for revocation of the patent was heard by Pumfrey J earlier this year. By his judgment of 12^th July 2002 he held the patent to be only partially valid. What is material so far as this case is concerned is that he held claim 11 valid. Both parties have appealed Pumfrey J's judgment. The appeal is due to be heard in May 2003. SB have launched an application for amendment of the patent. That application is due to be heard in July, after the decision of the Court of Appeal. Obviously it will not be pursued if SB are successful on the appeal, nor if BASF that successful. As matters stand however, the patent has been held to be partially valid and claim 11 has been held to be valid.
3. The amendments which SB are currently seeking go beyond striking out all claims other than claim 11. Mr Watson QC for Apotex submitted that they were "ambitious". I am not sure about that. Nor does it matter for present purposes. The fact that the patent is only partially valid forms the basis of some of the submissions made on behalf of Apotex as to why there should not be an interlocutory or interim injunction. They form part of the conventional first issue arising when one considers whether there should be an interim injunction, namely is there a serious issue to be tried? It is to that I now turn considering the points raised issue by issue.

Infringement – Construction of "solvate"

4. Apotex say there is no seriously arguable case of infringement. The valid claim, claim 11, reads as follows:

"A process for the preparation of paroxetine hydrochloride anhydrate substantially free of bound organic solvent which comprises displacing the solvated solvent or solvents from a paroxetine hydrochloride solvate using a displacing agent".

5. Apotex say they do not use this process. They say their process does not start with a solvate – its starts with an anhydrate. SB has not seen this process, which is said to be confidential. Nor has any independent expert for SB seen the Apotex process. There has simply not been time for this sort of investigation. SB do raise certain queries on what the process actually is. They complain that they have not had as much information as could have been provided about the process. Some of that information was identified in SB's evidence – for example, some original notebooks were called for and had not been supplied.
6. Because the process is said to be confidential I do not go into detail here. It is sufficient to say that SB have produced some evidence from a Mr Ward who has analysed samples which have been provided by Apotex which raises a prima facie case that the claim 11 process had been used. The rebuttal material provided by Apotex which includes the details of the process to the extent indicated, has raised one issue which can be looked at now. That issue is this: what is the meaning of the word "solvate" in claim 11?
7. Mr Watson QC for Apotex submits that it means what might be called "a true solvate", that is to say crystals with a regular lattice which includes molecules of paroxetine hydrochloride and of a solvate. This would be the definition of a solvate outside the context of the patent used by a crystallographer. Mr Waugh QC for SB was not prepared to accept that that was the general acontextual meaning outside crystallography. It might be wider in some circumstances to include cases where solvent was bound in some other way than crystalline form in with the paroxetine hydrochloride.
8. I am not so much concerned with the acontextual meaning as the contextual meaning. Mr Waugh submits that the patent makes it abundantly clear that what the patent means by a "solvate" is a material in which the solvent is bound. Thus, he points to the following passages in the patent:

"Paroxetine hydrochloride anhydrate is also purported to be disclosed in [an identified publication]. The anhydrate is said to be produced by crystallizing paroxetine hydrochloride from anhydrous propan-2-ol. Subsequent repetition of this process has resulted in propan-2-ol solvate, a paroxetine hydrochloride. That is to say that there is bound propan-2-ol in the product. This bound propan-2-ol cannot be removed by conventional drying techniques such as vacuum oven drying.

Paroxetine hydrochloride anhydrate substantially free of bound propan-2-ol has not been described in the literature, nor has any method been disclosed which would yield such a product as an inevitable result. The method of preparing paroxetine hydrochloride anhydrates substantially free of bound propan-2-ol has now been found."

"Substantially free of bound organic solvent is to be interpreted to be less than the amount of propan-2-ol which would remain solvated, ie., bound within the crystal lattice of the product under conventional vacuum oven drying techniques".

There are other passages to like effect.

9. Mr Waugh says this makes it absolutely plain that what is meant by "solvate" is no more than that the solvent cannot be removed by conventional vacuum oven drying techniques. There is no limitation that the solvent molecules be bound within a crystalline lattice in the form of a crystal.
10. Moreover, submits Mr Waugh this is obviously the purposive way to read the word. A major point of the invention is to get rid of solvent. You do not want to be administering a pharmaceutical which contains unnecessary and possibly deleterious solvent molecules.
11. Mr Watson relied on some matter which appeared in the judgment of Pumfrey J. In paragraph 29 Pumfrey J quoted from what he described as "the unchallenged evidence from the report of Professor Frampton". Professor Frampton said:

"A solvate is a single crystalline phase of a given compound of specific chemical structure in which a solvent molecule or molecules have been incorporated into the crystal lattice. In a solvate each solvent molecule will occupy a specific lattice point within the crystalline lattice, and a solvent is thus a discrete crystalline form that can be characterized as such on the basis of unique analytical data."

12. That definition is what I have described as the crystallographer's definition. If the word "solvate" in claim 11 is so limited and if Apotex's process is what they say it is, then there would be no infringement. Mr Watson attacks head on Mr Waugh's construction. Firstly, he says that Pumfrey J implicitly held that a solvent which is bound but not in a crystalline lattice is not a solvate. At paragraph 63 of his judgment he was describing an experiment conducted on the prior art. He said this:

"The acetone content was 1.7% and the unchallenged analytical evidence was that this produced paroxetine hydrochloride anhydrate form A in the form of needles. There is more than a trace of acetone, and it is bound, but it is not solvate."

13. Mr Watson submits that in this passage Pumfrey J has specifically construed the word "solvate" by implication. Mr Watson puts it this way:

"Claim 11 is a method of converting a solvate into an anhydrate. For that purpose you must start with a solvate".

14. Mr Watson further points to a passage in the specification which indicates that anhydrate may nonetheless contain some solvent:

"It should be understood that the present invention comprising paroxetine hydrochloric anhydrate substantially free of bound propan-2-ol may contain unbound water, that is to say water which is other than water of crystallization.

Typically, the amount of bound organic solvent on a weight for weight basis would be less than 2% …"

15. So, says Mr Watson that contemplates solvent being bound and the product still being regarded as an anhydrate which is exactly what his clients effectively do. His clients do not start with a solvate. And the patent cannot by the term "solvate" have as wide a meaning as that for which Mr Waugh contends.
16. Mr Watson makes another point. The patent after grant (so called B specification) was amended in Patent Office proceedings. Mr Watson submits that prior to that amendment (to what the present form of the patent is, "C") the patent clearly drew a distinction between solvates and anhydrates. Before the amendment to "C" the patent had claimed solvates. So, says Mr Watson, how can you tell what the patentee meant by a "solvate" and what he meant by an "anhydrate"? Moreover, says Mr Watson if the patent now draws a distinction which is different from that drawn in the B specification, then there has been added matter and an amendment has been made which ought not to have been allowed and the patent is consequently invalid.
17. I accept that there may be substance in Mr Watson's arguments, but I am not convinced they are conclusive. Pumfrey J was simply not concerned to construe the word "solvate" in the context of claim 11 or at all. Nothing turned on it before him. Paragraph 63 of his judgment and the quotation from Professor Frampton were not concerned with construction. There is much to be said for Mr Waugh's "purposive" construction. Accordingly, I hold that there is a seriously arguable case of infringement. This conclusion leads also to the conclusion that Apotex's application to have the claim struck out must be refused.

The non-exploitation point

18. SB do not sell the product of claim 11. What they sell, Seroxat, contains paroxetine hydrochloride hemihydrate. That is said to be covered by another SB patent but this patent is not itself being used.
19. On this basis Mr Watson submits that SB could never claim by way of damages anything other than a reasonable royalty for the infringement of this patent. It is a bold submission. For all practical purposes the hemihydrate and the anhydrous product are equivalent. If a doctor prescribes "paroxetine", a pill of one or the other will serve equally well. The effect of infringement of either patent would be exactly the same on SB. Yet if Mr Watson is right the law provides different remedies depending on which of these two equivalent products is sold.
20. Mr Watson starts his argument by reminding me that damages for infringement of patent can be granted on one of two different bases. If the patentee does not himself exploit his patent then he is given a reasonable royalty by way of damages. If he exploits the patent then he can claim his actual damage – see General Tire [1976] RPC 197. This case, submitted Mr Watson, was a clear example of the former. Mr Watson reinforced his submission by reference to what was said by Buckley LJ and Goff LJ in Polaroid v Kodak [1977] RPC 379. In that case in obiter passages it was indicated that, because Polaroid were suing on the patents relating to the integral instant photographic process, damage to their business in "peel apart" could not be recovered and, accordingly, should not be taken into account for the purposes of considering possible damage caused pending trial. The damage to the peel apart business was said to be too remote.
21. The notion underlying this was that somehow or other the patent was protecting more than it should. However, in Corruplast v George Harrison [1978] RPC 761, the Court of Appeal granted an interim injunction when a patent was close to expiry on the grounds that the defendant would be able to build a bridgehead before expiry enabling him to sell more goods after expiry than he otherwise could. Of these cases I said in Gerber v Lectra [1995] RPC 383 at p.398:

"I am bound to say that the two cases on this point, seem inconsistent one with the another so far as the grant of interlocutory injunctions is concerned. In Polaroid the supposed inability to recover for loss sales of unpatented items was a reason for refusing an interlocutory injunction, yet in Corruplast it was a reason for grant. They can only be reconciled if one can draw a rational distinction between taking sales of unpatented items during the life of the patent and establishing a better position to take such sales after expiry. Yet both are foreseeably caused by infringement".

22. When my decision went on appeal the leading judgment was given by Staughton LJ. Staughton LJ held that the normal principles as regards the damages recoverable for infringement were the same as those recoverable for many other torts. He referred to Halsbury's Laws of England setting out what he described as the elementary rules:

"(i) That the overriding principle is that the victim should be restored to the position he would have been in if no wrong had been done;

(ii) That the victim can recover loss which was (1) foreseeable and (2) caused by the wrong and (3) not excluded from recovery by public or social policy".

23. He went on to hold that causation must be as a matter of common sense the cause of the loss. He noted the conflict between the Polaroid case and the Corruplast case. Mr Watson relies on what Staughton LJ said about Polaroid:

"That was an appeal against the grant of an interlocutory injunction. It was set aside, apparently on the grounds that damages would be a sufficient remedy. The plaintiffs relied on loss which they would suffer, not only to their business in the integral system of instant photography (which was patented), but also to their business in the peel apart system (which for the most part was not). That as it seems to me was not a case of convoyed goods; a photographer would buy one system or the other but not both. Infringing the patents relating to the integral system might, in the event, damage the business in the peel apart system but such loss would surely feel the test of causation or else (as Goff LJ had said page 397), be too remote".

24. Mr Watson submits that this passage is authority limiting the damages which are caused by infringement to cases of "convoyed goods". He suggests the law draws a distinction where the defendant's sales are in substitution for the patentee's goods as opposed to sales which cause the patentee to lose sales of unpatented goods such as spares.
25. I disagree. If one reads Staughton LJ's judgment as a whole it is an affirmation that the general rules of tort law apply. Staughton LJ's "first impression", namely that "the Patents Act is aimed at protecting patentees from commercial loss resulting from the wrongful infringement of their rights" was his final conclusion. His discussion of the Polaroid case is not, in my judgment, to be read as setting up the kind of distinction suggested by Mr Watson. The plain fact is that if the defendants sell the anhydrate it is the natural and probable consequence of their act that SB will lose sales on a one to one basis of the hemihydrate. One would be a direct cause of the other.
26. The last submission raised in relation to this point was based upon a suggestion of abuse of monopoly and the possibility of an application for a compulsory licence. The provisions as to compulsory licences have been amended as a consequence of the World Trade Organization Agreements. Under Section 48(a) the grounds for the grant of a compulsory licence of a patent in respect of which the proprietor is a "WTO proprietor" are set out. SB are a WTO proprietor. None of the grounds could apply. Moreover, even when the grounds for a compulsory licence are established it would seem that there is a discretion to refuse the licence. Section 48(2) says:

"Subject to sub-sections 48(a) and 48 below, if he is satisfied that any of the relevant grounds are established, the Comptroller may … order the grant of a licence".

27. If the patentee could prove that he was reasonably supplying the UK market with an exact equivalent of what was covered by his patent, I would have thought that might well apply. There is nothing in Mr Watson's compulsory licence point.
28. Nor is there anything in the more general "abuse of monopoly" suggestion. There is nothing abusive in not working one process when you work an equivalent as hard as you can.
29. Finally on this point Mr Watson referred to Peaudouce v Kimberley Clark [1996] FSR 680. Robert Walker J discussed what I had said in Gerber. I do not read him as saying anything other than that damage which is too remote is not recoverable. In that case he said:

"It is a question of looking to see which plaintiff has a cause of action and what economic loss it has really suffered."

He was concerned with a case in which one subsidiary was claiming that damage to a sister subsidiary was damage which had been caused to it simply because both companies had a common parent. That is miles from this case.

Do the amendment proceedings preclude the grant of an interim injunction?

30. Following Pumfrey J's judgment he was specifically asked to impose a term that the patentees should not, pending amendment, enforce the patent. He refused to do so. Apotex so far as I can see could have appeared on that occasion. Nor was Pumfrey J asked to impose such a term at the first directions hearing in the amendment proceedings – to which Apotex are a party. Notwithstanding that Mr Watson submits that because SB are seeking amendments – particularly amendments which he describes as ambitious – no interim injunction should be granted. Reliance is placed on Molnlycke v P&G 2 [1990] RPC 487. But that case was decided on the basis that not only was the patent in its original form invalid, but that no-one could know exactly what the amendments which were going to be allowed might be. As Falconer J put it, "the patent is in a state of limbo". He asked the forensic question, "under what monopoly is the injunction to be granted?". In the present case claim 11 has been held to be valid. And in the present case it is only that claim which is alleged to be infringed. It may be that the so-called ambitious claims will not be allowed. On that I express no view. The plain fact is that claim 11 stands. Faulkner J's reasons for refusing an injunction in Molyncke simply do not apply here.
31. Quite apart from Molyncke being distinguishable, there is a formidable body of authority to the effect that the court can enforce a partially valid patent by way of interlocutory injunction where the enforcement is of a claim which is valid. Thus in Hoffmann-La Roche v DDSA [1965] RPC 503, Lord Denning MR said this:

"I may add that even if Claims 1 and 2 are so wide that the probability is that they are invalid, nevertheless it is plain that Claim 3 is valid. This brings me to section 62 of the Patent Act 1949 which provides in sub-section 1:

"If in proceedings for infringement of an patent it is found that any claim of the specification, being a claim in respect of which infringement is alleged, is valid but that any other claim is invalid, the court may grant relief in respect of any valid claim which is infringed".

It seems to me that under that section an interlocutory injunction can be granted in respect of the valid claim. It is not necessary for the court at the interlocutory stage to consider whether an amendment should be made to the specification (under sub-section 3). That can be considered at the trial. It is sufficient for an interlocutory injunction that a prima facie case of validity is established in respect of Claim 3 in this letters patent and of the infringement of it".

32. Harman LJ in the same case said this:

"Even that leaves the third claim admittedly valid and admittedly infringed, and if the plaintiffs are driven to it they have recourse to Section 62. It is said that one ought not have regard to Section 62 for the purpose of an interlocutory injunction; I do not agree with that contention. You will not decide the matter upon Section 62 but you will look at its possible help to the plaintiffs only if one or more of the other claims is proved to be invalid. Prima facie, under Section 62 the plaintiffs will get relief, unless they had been dishonest in some way."

33. Aldous J took the same view in Autopia Terakat v Gwent Auto [1991] FSR 517 at p.519. He said:

"A patentee can obtain relief in respect of a patent which is partially valid: Patents Act 1977 Section 63. Further, in appropriate cases an interlocutory injunction will be granted where a patent contains a claim which is invalid but another claim is valid and infringed".

34. That he continues to hold the same opinion appears from his judgment in Kimberley-Clark v P&G [2000] RPC 422 at p.437. Aldous LJ was concerned with what the position was where there were proceedings in this country and opposition proceedings in the EPO with amendments being offered in both sets of proceedings. One of the problems is that oppositions can take a long time. Aldous LJ, in the course of his discussion of the problem, said this:

"I have already referred to the option to stay the proceedings in this country which, in my view must be the preferred option when opposition proceedings are before the EPO. Unfortunately the judge did not consider whether in this case a stay would cause injustice. He referred to lengthy periods during which good and valuable patent rights would be unenforceable, but did not consider the possibility that interlocutory relief could be granted in the meantime."

35. So Aldous LJ took the view that, even when opposition proceedings were pending and amendments were being offered, an interlocutory injunction could be granted. Finally, so far as authority is concerned, I mention the fact that Aldous J was content to continue an interlocutory injunction after trial in Hallen v Brabantia [1990] RPC 307 at p.331. This was so even though the patent had been held partially valid and would require amendment.
36. I would have come to the same conclusion without any authority. Where a claim has been held valid then to say that it cannot be enforced by way of interim injunction because some other claims had been held invalid, appears to be a purely technical and meritless objection. One knows that at the end of the day, subject to the Court of Appeal and Apotex's new attack upon validity, this claim is good and that, to say the very least, in all likelihood the patent will be amended with this claim in it. That means that there is an arguable case in relation to that claim.
37. Actually, Neuberger J has gone further. For he has held that "in the case of a partially valid patent the valid claims are enforceable, even in the absence of the deleting amendment, ie. an amendment deleting the invalid claims" – see Kirin-Amgen's Patent [2002] RPC 851 at para 57 and the cases there cited. I would only depart from a decision of a Chancery judge if I was convinced that it was wrong. I am far from being convinced. Mr Watson rather accepted that he could not really challenge Neuberger J's decision at this level.
38. It follows there is nothing in the patent-needs-amendment-so-no-interim-injunction point.

The Section 62(3) point

39. Section 62(3) of the Patents Act 1977 provides that:

"Where an amendment of the specification of a patent has been allowed under any of the provisions of this Act, no damages shall be awarded in proceedings for an infringement of the patent committed before the decision to allow the amendment unless the court or the Comptroller is satisfied that the specification of the patent as published was framed in good faith and with reasonable skill and knowledge."

40. Mr Watson takes a number of points based upon this provision. He says the patent needs amendment and on the current timetable cannot possibly be amended until July 2003. If amendment is allowed (and it does not matter whether down to the "ambitious" amendments or simply down to claim 11) SB by virtue of this provision could not claim any damages for acts done prior to the amendment unless they can show that the specification of the patent was framed in good faith and with reasonable skill and knowledge (gf and rsk) That they cannot do. So they will never be able to recover any financial compensation for any acts done by Apotex or anyone else until the patent is amended. It follows that no injunction should be granted: injunctions are granted to prevent damage but there will be none here.
41. In response Mr Waugh says the argument is wrong in principle, whether or not a patentee can show good faith and reasonable skill and knowledge is irrelevant because Parliament has not excluded the remedy of an injunction and that will include an interlocutory injunction. Further, if Mr Watson is right and damages cannot be obtained at all then that is all the more reason for granting an interlocutory injunction: damages will manifestly be an inadequate remedy. Further, if it is necessary to show that there is an arguable case of gf and rsk then that is shown to the standard necessary at this stage.
42. Before I embark upon a consideration of these points I should mention a point which Mr Watson is not taking. The patent was amended in proceedings before the Comptroller in the spring of 2001 (the "C" specification). Section 62(3) refers to "the specification of the patent as published". If one takes that purely literally it would suggest that even though SB have amended to put things right they cannot recover damages for acts after things had been put right. One might call it a rule of "original sin". The sinner can never make amends however much he repents and mends his ways. Mr Watson recognised the absurdity of that conclusion and accepted that the answer to the point lies in s. 75(3) which provides:

"An amendment of a specification of a patent under this section shall have effect and be deemed always to have had effect from the grant of the patent".

43. Section 62(3) when it refers to the specification of the patent as published is, by virtue of s.75(3), referring to the specification as amended. Accordingly Mr Watson confines his attack of lack of gf and rsk to the specification as it was amended in 2001 – the so called "C" specification.
44. I turn to Mr Waugh's first answer – that if Mr Watson is right and damages are irrecoverable, that is all the more reason for granting an interim injunction. He points to the general nature of the power to grant injunctions contained in Section 37(1) of the Supreme Court Act 1981:

"The High Court may by order (whether interlocutory or final) grant an injunction … in all cases in which it appears to the court to be just and convenient to do so."

45. That provision is not qualified in any way by s.62(3). All that is removed by s.62(3) is the jurisdiction to award damages if gf and rsk cannot be shown. If Mr Watson's contention were right there would be an unwritten qualification on the power to grant interlocutory injunctions. Next Mr Waugh reminds me of the purpose of ordering an interim injunction, namely to prevent the occurrence of damage which cannot be repaired or compensated at a later date. He referred to me to American Cynamid [1975] AC 396 and particularly to the well known passage at page 406. He emphasised the sentence of Lord Diplock's speech:

"The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated and damages recoverable in the action if the uncertainty were resolved in his favour at the trial".

He also referred me to what was said by Lord Wilberforce in Garden Cottage Foods [1984] 1 AC 130 at p.153:

"The evidence makes, to my mind, a clear case of what is called 'irreparable' damage. Of the many cases in which this has been held, I will cite only the well-known judgment of Kay LJ in J Lyons & Sons v Wilkins [1896] 1 Ch 811 at 827, where he said:

'… in all these cases of interlocutory injunctions where a man's trade is affected one sees the enormous importance that there may be in interfering at once before the action can be brought on for trial because during the interval, which may be long or short … a man's trade might be absolutely destroyed or ruined by a course of proceedings which … may be determined to be utterly illegal and yet nothing can compensate the man for the utter loss of his business by what has been done in that interval".

46. Next, Mr Waugh submitted that the very same sort of point as was being advanced now had already been considered by Laws J in ex parte Rhone-Poulenc 23 December 1997, unreported. The plaintiffs were seeking an interim injunction against the Medicines Control Agency who had granted some parallel importers licences which had been obtained on the basis of a marketing authorization which had been revoked and replaced by a new marketing authorization. Rhone-Poulenc wanted an order against the Authority requiring them to suspend the variation of the parallel import licences whilst the position was clarified under a reference to the ECJ. Rhone-Poulenc argued that there was no remedy in law in damages and that was why they ought to have an interlocutory injunction. Laws J said this:

"But Mr Platts-Mills has other arguments. First, he advances a discrete point of law. It is that, upon the premise that RPR could not maintain an action for damages either against MCA or against the importers, no injunction should go: an interlocutory injunction should not be granted to protect a plaintiff or applicant against potential losses which would themselves be irrecoverable at law. This argument involves, to my mind, the proposition that the very reason why damages are an inadequate (because unavailable) remedy to RPR amounts itself to a reason why they should not obtain an injunction. At first blush, the submission possesses an Alice in Wonderland, or perhaps Gilbertian, quality. However, Mr Platts-Mills cited authority: Peaudouce v Kimberley Clark [1996] FSR 680. He referred to a passage at 692, where Robert Walker J (as he then was) said:

"But the important point for present purposes is the plaintiffs's claim for an injunction as a protection against, among other things, avowedly irrecoverable losses elsewhere in the Molnycke deivision of the Svenska group. It seems to me that that approach is wrong in principle. In general ... injunctions are granted in order to protect a plaintiff from loss which would sound in damages, not from loss which would not sound in damages. As Goff LJ said in Polaroid Corporation v Eastman Kodak Co [1977] RPC 379, 397: "… one is not entitled to an injunction to avoid damages which, if suffered, would be too remote"

However in Peaudouce the plaintiffs were seeking protection against losses which might potentially be suffered by a third party, a stranger to the proceedings: see, in particular, p 693 of the judgment.

As it happens Mr Hobbs took a similar point to that taken by Mr Platts-Mills in Timeload Ltd v BT (unreported, Court of Appeal, transcript 30 November 1993), which may not have been cited to Robert Walker J in Peaudouce. In Timeload the deputy judge at first instance had granted an interlocutory injunction to restrain BT from terminating the plaintiffs' use of a certain telephone number. It is not, I think, necessary to go into the facts. Sir Thomas Bingham MR (as he then was) said at 16C-D of the transcript, in the context of his discussion of the balance of convenience:

"I begin by touching briefly on the adequacy of damages for Timeload. Mr Hobbs took two main points. The first was that the relevant service was run by Free Pages Ltd and not by Timeload. Free Pages was not a plaintiff. He argued that Timeload could not recover damages suffered by a third party."

Then at 16F-G:

"It is not clear to me that Timeload will not suffer damage if the Free Pages business founders and I think it not improbable that it can recover damages directly, if not indirectly; but if it cannot, then damages are an obviously inadequate remedy for those who will suffer loss on the plaintiffs' side"".

47. The same sort of point was considered by the Court of Appeal in Timeload v BT, CA, 30 November 1993 and also in ex parte Monsanto [1999] FSR 223. This was another approval case, this time approval by MAFF of a herbicide. Monsanto were seeking an interim injunction or what was, in effect an interim injunction, in the form of a stay of the operation of the approval. On the question of inadequacy of damages Counsel for an intervening party, Mr Howe, made a submission based on exactly the same point as had been considered by Laws J. His rejected submission is summarized by Rose LJ at page 230:

"As to the inadequacy of damages for Monsanto, Mr Howe submitted that there are sound reasons of legal policy which preclude a claim by them for damages. It would be paradoxical if legal policy for refusing damages led to a greater readiness to grant injunctive relief: he sought support for this proposition from an observation by Goff LJ in Polaroid Corp v Eastman Kodak Co [1977] RPC 379 at 397 and per Robert Walker J in Peaudouce SA v Kimberley Clark Ltd [1996] FSR 680 at 692. He submitted that the same reasons of public policy which exclude recoverability of a head of loss in damages may also lead to that loss being disregarded when considering a claim for an injunction."

48. The Court of Appeal expressly approved the approach taken by Laws J in Rhone-Poulenc see page 232.
49. Mr Watson submitted that this was absurd. Suppose, he said, a case where a patentee cannot show irreparable damage and so in the ordinary course of events no injunction would be granted. Can he stand up and say "but my patent was not drafted with reasonable skill and knowledge, it will have to be amended, therefore I can never recover any damages so I need an interim injunction". If that is right then the patentee with a rottenly drafted patent is better off than a patentee with a well drafted patent. I think the short answer to that point is to remember that an interlocutory injunction is always a discretionary remedy. A patentee who sought to make a virtue of his rotten drafting could find himself refused an injunction on that basis.
50. Putting that sort of point on one side, I think I must accept the principles established by Laws J and the Court of Appeal in Timeload and Monsanto. In this case SB do not accept that their patent was framed without good faith or reasonable skill and knowledge. It is to that point I now turn.
51. Mr Watson's first point is that there is no pleading to the effect that the patent was framed with good faith and reasonable skill and knowledge. This is a thoroughly bad point. There is no claim for damages which could be advanced yet. Apotex had not started. Moreover, I made it plain when the matter came before me earlier that what mattered was the evidence and not pleadings and indicated to Mr Waugh that the pleading did not matter, a position which was accepted by Mr Watson on that occasion.
52. Next, I must observe that the points now being taken by Mr Watson are not the same as those which were originally taken. Mr Waugh complains, I think not unreasonably, that he has been dealing with a moving target. This makes it all the more difficult to reach a firm conclusion one way or the other on the issue of good faith and reasonable skill and knowledge. It is true that Pumfrey J criticized the drafting of the patent in his judgment but in the end the principal point relied upon by Mr Watson was not properly foreshadowed in Apotex's evidence or on the occasion when the matter came before me on the first occasion and is not based upon the matters referred to by Pumfrey J.
53. Mr Watson's first point relates to the specification as originally published – the B specification. It contains claims to solvates which he says the patentees knew or ought to have known were already disclosed. I am not quite sure why he took this point because he had conceded that it was bad in law, the claims for solvates having been removed by amendment when the C specification came into being.
54. I put that point on one side and turn to Mr Watson's principal point. He begins by referring me to Chiron v Organon (No 7) [1994] FSR 458 at 467. Aldous J quoted from what he had said in Hallen v Brabantia [1990] FSR 134 at p142 and went on to make observations about the instructions given to the draughtsman:

" 'Taking guidance from those statements, it is my view that section 63(2) imposes upon a plaintiff a duty to prove on the balance of probabilities two things: first that the specification was framed in good faith. That requires a plaintiff to prove that the specification was framed honestly with a view to obtaining a monopoly to which, on the material known to him, he believed he was entitled. Secondly, that the specification was framed with reasonable skill and knowledge. The words "skill and knowledge" are a composite phrase relating to the competence employed in framing the specification and require the specification as framed to be in the form in which a person, with reasonable skill in drafting patent specifications and a knowledge of the law and practice relating thereto, would produce'.

Neither the plaintiffs nor the defendants suggested that the observations that I made in that case were wrong. However, I did not have in mind the possibilility that the draftsman may not have been properly instructed on the details of the invention. In such a case, a patentee cannot be in a better position than a patentee who properly instructs the draftsman. Thus the words in the Act require the specification as framed to be in a form in which a person, with reasonable skill in drafting patent specifications and knowledge of the law and practice relating thereto, would produce with the patentee's knowledge of the invention."

55. Mr Watson sought to apply those principles to the facts of this case. He said that GSK had applied for a patent in 1985, number 852,6407 ("407"). By the time the amended C specification was being prepared SB knew that 407 was prior art and they knew, or ought to have known, that Claim 3 included matter disclosed in 407. Moreover, said Mr Watson, they knew that what was disclosed in 407 was enabling.
56. I do not accept this argument. I do not do so for several reasons. First, I do not think it right to deal with a point that was assembled at the last minute as it seems to me it was. An allegation of lack of gf and rsk is a serious allegation. It is true the patentee has to make it out but nonetheless it is a serious matter. Secondly, this is not a point that was taken by the distinguished patent agent, Mr John Brown currently the President of the Chartered Institute of Patent Agents, who gave evidence for Apotex. I have no relevant expert evidence on the question. (Incidentally, the fact that the point was not mentioned by Mr Brown shows how much of a johnny-come-lately point it is). Thirdly, there is still a live issue on the validity of claim 3 being raised on appeal. I cannot say for sure that the Court of Appeal will uphold Pumfrey J in all respects. Fourthly there is a real issue about 407 being an enabling disclosure.
57. In short, I am not in a position to hold firmly and conclusively that the C version of the patent was drafted without gf or rsk. Much remains to be clarified. The point remains arguable one way or the other.

Discretion on amendment

58. Next Mr Watson suggested, faintly, that even if SB are allowed to amend the patent, it may be that the court would impose a condition precluding back damages. I cannot see why. I suppose if someone had been harmed by the unduly wide claims this would be possible but that would not apply to Apotex who, if SB are right, will have infringed a valid claim.

Are damages an adequate remedy?

59. The upshot of all the foregoing is that I hold that there is a serious issue to be tried. Following the Cyanamid guidelines the next question to be considered is whether damages are an adequate remedy either to the claimant or to Apotex on the claimant's cross-undertaking should be claimants fail at trial. Mr Watson accepts that if Apotex, or indeed any other generic company, enters the market SB will not only lose substantial sales but the price will collapse. It is suggested that Apotex might take as much as 40% of the UK paroxetine market before trial. On top of that SB's prices would be severely eroded. He accepts that damage, perhaps as much as £35m worth, might be caused. In my judgment the position is exactly the same as it was when I granted an interim injunction concerning paroxetine in Smithkline Beecham v Generics, 23 October 2001. The position in fact is much the same as it was then. Then SB had one distributor, Norton, and now have three. But if Apotex enter the market the arrangements with those companies are likely to be undermined for the same reasons as I gave before.
60. Mr Watson accepted that he had a tall order to persuade me that I was wrong last time. He made the same points as were made last time. The point he concentrated upon most, namely that if his clients enter the market there will be a certain history as to what happened to SB's sales and the inroads made into their market, whereas if an injunction is granted how much Apotex would have sold would remain a matter of speculation. Mr Watson invited SB to accept that absent an injunction Apotex would take 40% of the market. Not surprisingly SB did not so accept. That, said Mr Watson, showed how uncertain his claim on any cross-undertaking might be.
61. As in the last case there is evidence of the difficulty of raising a price once it has been lowered and of the complications of the fact that the prices link with the prices for other drugs and so on. I think there would be formidable difficulties in SB's way if it tried to get back to its present position after a major collapse of prices. I remain firmly convinced that the damage caused by entry into the market on a substantial scale will be both very, very substantial and not adequately quantifiable. The position is as described by Kay LJ in Lyons v Wilkins approved by Lord Wilberforce in Garden Cottage (see above).
62. I also accept that the damage to Apotex if the injunction is wrongly granted is unquantifiable and yet substantial. One would have to form a view as to what proportion of the market they would have gained. That would not be entirely a matter of speculation because by the time of the enquiry Apotex would have entered the market, or others would have entered into the market, and one could form a view as to how much Apotex would have got. The effect on prices and so on would by then be known. So it would not be a matter of speculating entirely without any basis.
63. Mr Watson finally attacked what I said in SB as wrong in principle. What I said was as follows:

"I turn to another factor which, to my mind, indicates that the injunction should be granted. It is this. The defendants have known for a long time about this patent. You would have to be very naïve in the pharmaceutical industry to think that the patentee, with a product as important as this, would not, if it had anything other than a frivolous chance of success, take action. So the defendants knew, when they set out upon this project in 1997 that if the patentees would cause trouble they would.

The defendants could, so soon as they settled upon the product they were intending to sell, have caused the litigation to start. They could have done a number of things: First, they could have launched a petition for the revocation of the patent and started a claim for a declaration of non-infringement. Or, since there are certain difficulties with the latter (for example onus of proof goes the other way round), they could simply have said to the patentees, "We intend (we are not saying when but it is a settled intention) to launch our product within the next five years. If you intend to sue us, sue us now". If they had taken such a course, having settled upon the product they intended to sell, the whole of this dispute would have been got out of the way before their date of intended launch.

Mr Arnold says, "That is quite unfair. It puts the burden upon the defendant. Why should there be any such burden to start litigation when they are firmly of the opinion they do not infringe and" – as a back-up option – "the patent is no good?" The answer, to my mind, is self-evident. They knew perfectly well the issue of infringement was likely to arise. If they wanted to be sure of their position they could and would have made sure that all their experimental data was properly in place and vouched for by an independent scientist. And they would have presented the evidence to the patentees.

This is not a case where they could say, on the material they had, it was certain not to fall within the claims. They had materials they could point to from their supplier and from the exerpiments conducted by their sister company in Australia which suggested that was so. They did not, in fact, have details of the experiments themselves – no notebooks, no examples of the samples that were tested or anything of the kind. The commercial position was that they did not take the steps necessary to show exaclty what the product they were intending to sell was.

As for the validity of the patent, their case is that if you conduct what is described in 407 you will fall within the claims of this patent. Nothing would be simpler than to do just that and to show that was so. At the moment the case is constructed by way of interference and is no more than a possible case.

I see no question of principle involved here of any sort. It is purely commercial common sense. If there may be an obstacle in your way, clear it out. To my mind, this is a case where the retention of the status quo is a rational thing to do. It was something that could have been avoided by the defendants; they chose not do it."

64. In this case the position is even stronger. Apotex had been eyeing the UK market for a long time. In mid-November 2001 the second defendants, Apotex's distributors, gave an undertaking not to launch a product without giving three weeks advance notice. They were "presently minded (subject of course to obtaining the approval of the manufacturer) to endeavour to satisfy your client that the product concerned did not infringe your client's patent". No such steps were taken. Notice was simply given a year later. Moreover, Apotex had representatives watching the trial before Pumfrey J. They clearly could have joined in if they had so wished. Indeed, if they are right in their attack on validity they would have done the good job which they say BASF failed to do. In short, Apotex deliberately refrained from making their own application for revocation and deliberately refrained from openly disclosing exactly what they were intending to make. The consequence of so doing is the current uncertainty as to what the position would be if they are restrained from entering the market now. It is an uncertainty which they brought upon themselves. And deliberately so. There is nothing wrong in that but it seems to me to be a material consideration in the general balance of convenience to bear in mind that the very uncertainty relied upon as a reason for not granting an injunction could have been avoided by the defendant.
65. Mr Watson says this is wrong as a matter of policy. He repeats in effect what Mr Arnold said to me in the Generics case. He says why should the defendant have to start the litigation? It is wrong in principle that a party should be blamed for not starting litigation. I think that is wholly uncommercial in the circumstances of this case. There was bound to be litigation unless the case was hopeless. Both sides knew that. And in any event if there had been open disclosure of what Apotex were planning to sell and how it was made (for instance to an independent expert) and SKB accepted that it did not infringe the matter would have been settled ages ago.
66. I remain of the same opinion that I was in the Generics case. Where litigation is bound to ensue if the defendant introduces his product he can avoid all the problems of an interlocutory injunction if he clears the way first. That is what the procedures for revocation and declaration for non-infringement are for.
67. Finally, I turn to the question of whether the defendants would be good for any damages. The Apotex parent company offers a guarantee in the sum of £35m. But that company is a private company and the question arises as to whether it would be good for the money. Both sides have filed evidence. The position as regards the defendants is, to my mind, not sufficiently established. It is said that the company owns certain assets and that these assets are worth a lot more than the £35m. That may be so but there is unchallenged evidence to the effect that no banker would lend money on the information which has been made available.
68. The court is often asked to assess the creditworthiness of an organization. It happens not only on interim injunctions but in cases of security for costs and others too. In all these cases the plain and simple short cut is a guarantee from a bank in this country. In this case I indicated that that might be what was necessary when the matter first came before me. Apotex have chosen not go down that route. I do not see why, if a bank would not be prepared to guarantee that sum of money on the information provided, why the plaintiffs should have a less certain position. Mr Watson submitted that banks were always a bit difficult. No doubt they are. If they are difficult in this case then the £35m guaranteed may not be really worth it. In the end Mr Watson accepted that if I were to withhold an injunction it would be on the basis that a bank guarantee would be given. However, for the reasons I have given, this point in the end turned out not to be material.