16 October 2017

Interim Injunctions: A Risky Move or a Useful Tool?

Interim injunctions are a helpful tool to prevent potential infringement at an early stage of the litigation process, months before a court trial would take force. However, there are risks involved and applicants are usually required to provide an undertaking that they will cover any damages caused to the defendant as a result of the injunction should it be later found that their infringement claim is unfounded.

Napp Pharmaceutical Holdings Limited v Sandoz Limited and Others is an example of a case where a cross-undertaking in damages was given by Napp, in exchange for an interim injunction against Sandoz. Napp was unsuccessful in its patent infringement claim and the interim injunction against Sandoz was discharged.

Sandoz brought an application for damages caused by the interim injunction for over £100million. This figure was higher than the annual value of the relevant market, but was allegedly calculated on the basis that Sandoz was kept out of the market for 6 months, causing permanent damage to its business. Sandoz contended that the injunction prevented them from launching when they planned to and that they were entitled to the lost profit.

Napp requested further information relating to the profit margins and prices that Sandoz Limited claimed. Sandoz was unwilling to provide further detailed information as Napp was its closest competitor and Sandoz only gave a blended profit margin figure across all group companies.

The court agreed with Napp that the calculations and market growth figures were not explained adequately by Sandoz.  In addition, Sandoz had failed to plead how profits were attributed to the companies within the group.

It will be interesting to see what damages Napp are ordered to pay to Sandoz. This case highlights that although interim injunctions can be helpful to stop damaging infringement, there are risks involved and a cross-undertaking in damages should not be given lightly.

For more information about this article and to see how Mathys & Squire can help, litigation associate, Abigail Nicholls.