On 11 December 2024, the High Court delivered judgment in Commonwealth of Australia v Sanofi [2024] HCA 47.  The case concerned the Australian Government’s claim for damages arising from delayed generic entry following the grant of an interlocutory (preliminary) injunction to Sanofi against Apotex in 2007.  The High Court is Australia’s highest Court and usually comprises a five member bench. Special leave is required for the High Court to hear a case, and there are limited patent cases heard. The fact that the High Court granted special leave is indicative of the significance of this case.

In the financial year 2008, Sanofi’s PLAVIX clopidogrel products (also sold in Australia as ISCOVER by Bristol-Myers Squibb), a medication inhibiting the formation of blood clots, was the third most heavily Government subsidised prescribed drug in Australia.  Government costs for that year extended to approximately $170 million.

In August 2007 Apotex commenced legal action to revoke Sanofi’s Australian patent covering the product, and was quickly met with an interlocutory injunction application, which was successful. The injunction remained in force until it was ultimately found wholly invalid by the Full Court and special leave for appeal to the High Court was refused.  Apotex’s clopidogrel products were launched on 1 May 2010.

On grant of the interlocutory injunction, Sanofi was required to give the ‘usual undertaking as to damages’, by which it undertook to compensate any person adversely affected by the operation of the injunction.  After the patent was revoked, both Apotex and the Government brought claims pursuant to the undertaking, seeking damages for their losses resulting from the delayed launch of Apotex’s products. Apotex’s claim was settled. The Government continued with its claim which was based on its lost opportunity for pricing decreases for clopidogrel products which would have been triggered by a first generic entry, including an immediate mandatory price reduction, and further price disclosure related price reductions which would have occurred in the years following. The Government’s claim on this basis exceeded $325 million plus interest.

In 2023 the Full Federal Court upheld the decision of the first instance Court rejecting the Government’s claim.  A key issue was whether Apotex would have sought to PBS list its clopidogrel products even if it had not been restrained by the interlocutory injunction. There was also a question as to whether the loss claimed by the Government flowed directly from the grant of the interlocutory injunction.

The Court reviewed a significant body of documents and testimonial evidence, including a substantial number of emails.  The Government argued that the trial judge had failed to have regard to various parts of this material and submissions made at trial, and that he had erred in drawing a ‘Jones v Dunkel’ inference against the Government for failing to call Dr Sherman (the ultimate Apotex decision maker), that is, an inference that evidence from Dr Sherman would not have assisted the Government. The Full Court rejected all of these arguments, affirming the trial judge’s approach to the evidence.  The judge’s reasons were described as “a most thorough and searching excavation of the very complicated factual questions which the case generated”. 

The Government therefore failed in showing that had the injunction not been granted, Apotex would have launched its products. Its failure in this crucial respect was determinative of the case.

The High Court has now dismissed the appeal by a 3:2 majority.   The majority judgment turns on the conclusion that there was no plain injustice or clear error in the decisions of the Federal Court, and that these are the only limited circumstances in which the Court should review findings of fact made by a primary judge, which are not disturbed by an intermediate appellate Court.  As a result the majority concluded that the appeal should be dismissed.  In the separate dissenting judgment of Justice Jagot, she considered that the reasoning processes of the Courts below involved “clear error productive of plain injustice”, demanding the Court’s intervention.  She proceeded to analyse the underlying facts in some detail, concluding that no adverse inference should be drawn from the failure of Dr Sherman to give evidence, noting the difficulties involved in “reconstructive hypothetical evidence”.   Having carefully reviewed the correspondence leading up to the grant of the interlocutory injunction she noted that Dr Sherman had decided to launch Apotex’s products on three occasions, in circumstances where he was well aware of the risks of doing so and that it should be concluded that Apotex would have launched had the injunction not been granted. Giving the other dissenting judgement, Justice Beech-Jones reached similar conclusions.

Both dissenting judges emphasised that where a party obtains the benefit of an interlocutory injunction on one assumed factual basis, later assertions to the contrary to avoid liability under the undertaking as to damages should be subject to “close scrutiny and a degree of scepticism”.

The High Court’s decision to dismiss the appeal on the basis not of its conclusions on the facts, but because of the limits of its review powers means that little can be drawn from the majority judgment as to the level of proof required in future cases. However it is likely that the Commonwealth will rely on the two dissenting judgments in future cases as relevant to the Federal Court’s consideration of the facts in any given case.