The High Court case Commonwealth of Australia v Sanofi [2024] HCA 47 examined the issue of recoverable damages and the burden of proof in the context of a wrongly granted interlocutory injunction.

Sanofi’s patent which covered clopidogrel, was sold as Iscover® and Plavix® and is prescribed for heart attack and stroke patients. In 2007–2008, Sanofi enforced its patent against Apotex, preventing it from competing in the pharmaceutical market. Specifically, injunctions from the Federal Court of Australia blocked Apotex from securing a PBS-listing for its generic clopidogrel product. Apotex successfully appealed in 2009, which led to revocation of Sanofi’s patent. Following Sanofi’s failure to appeal their case to the High Court, the Commonwealth intervened and stood in as the appellant, acting in the interest of the public to keep medicinal costs afforsable. Seeking $11 million in damages, the Commonwealth argued that the injunction imposed on Apotex, delayed launch of a generic version of clopidogrel on 1 April 2008, resulting in higher drug prices.

The High Court as the Ultimate Appellant Court.

During proceedings before the High Court, the appellant deviated from their initial case as presented in the application for special leave, prompting an examination of whether a “clear error” disrupted concurrent factual findings.

As Australia’s highest appellate authority, the High Court reaffirmed that factual findings from lower courts will not be reassessed unless there is a “plain injustice” or a “clear error”, neither of which were present in this case. A simple mistake or differing conclusions do not meet the threshold for an error to qualify as “clear” or an injustice as “plain”. Appeals to the High Court focus strictly on legal errors, ensuring finality in the judicial system rather than conducting retrials.

Australia’s approach aligns with appellate principles observed internationally. In Canada, for example, the Supreme Court follows the “principle of non-intervention,” meaning trial-level factual findings stand unless disputed by an appellate court or a “palpable and overriding error” exists. Even weak evidence does not warrant overturning concurrent findings. Similar standards are upheld by the Supreme Court of the United States and judicial bodies in the United Kingdom, reinforcing the principle of limited appellate review in factual determinations.

Grounds of Appeal Pursued by the Commonwealth

There were two grounds of appeal pursued by the Commonwealth before the High Court, which concerned:

1. The onus of proof that is required in a claim for damages, and
2. An alleged error in the Full Court’s judgment.

On the first ground, the Commonwealth argued that its evidential burden was to establish a prima facie case demonstrating that the interlocutory injunction caused financial loss, the burden would then shift to Sanofi to prove Apotex would not have sought PBS listings for its generic clopidogrel.

On the second, the Commonwealth contended Apotex would have pursued and secured PBS listings without the injunction. The High Court’s findings on both grounds will be discussed in detail.

Findings Made by the High Court

In a 3:2 ruling, both appeal grounds succeeded. The High Court reaffirmed that a burden of proof may shift to a defendant when the defendant’s wrongdoing makes it difficult or impossible to establish loss, or where evidence is solely within the defendant’s capacity. However, these conditions did not apply here, and the Commonwealth bore the burden of proving financial loss during the interlocutory injunction (25 Sept 2007–19 Aug 2008). It had to show Apotex would have pursued PBS listing for its clopidogrel product— the “counter-factual test.” The Court clarified that this test must focus on Apotex’s actions and not on external opinions from those who are not the actual decision maker and who would therefore lack full information.

The Counter-Factual Test

The High Court found no clear error in lower court factual findings and identified multiple reasons why Apotex would not have pursued a PBS listing from 1 April 2008, even without the interlocutory injunction. A key factor was the absence of evidence that Apotex’s decision-maker was ready to launch at risk in late 2007. This was further complicated by two unforeseen events in September 2007: missing the PBS application deadline, thereby delaying possible approval to April 2008, and the grant of the interlocutory injunction, which set the final hearing date for 28 April 2008 – a date that was after the deadline for submitting a PBS application (due on 1 December 2007).

There was therefore no evidence Apotex would have launched at risk. In fact, emails had suggested that Apotex was unwilling to proceed without a PBS listing and would only launch upon Therapeutic Goods Administration approval and success in U.S. and Canadian litigation, which did not materialize. No cost-benefit analysis existed in 2007 to assess the risks, and later calculations in 2008–2009 did not apply retroactively. Furthermore, an email in August 2008 indicated Apotex might have refrained from launching even if it had invalidated Sanofi’s patent. The inconsistent stance taken by Apotex’s decision-maker weakened the case for an at-risk launch of generic clopidogrel.

Is the Financial Loss a Direct Outcome of the Interlocutory Injunction?

The High Court examined whether the Commonwealth’s losses flowed “directly” from the interlocutory injunction. Sanofi argued they were “indirect,” as they relied on Apotex securing PBS-listing for its products. The High Court rejected this, stating that without the injunction, Apotex’s products would have been listed, triggering a 12.5% price reduction for PBS-listed clopidogrel, subsidized by the Commonwealth. While this loss fell within the scope of the undertaking, determining its exact extent was complex, requiring further factual assessment, only some of which had been presented before the Court.

Defining a Person “Adversely Affected” by the Interlocutory Injunction

Sanofi argued the Commonwealth, as a body politic, was not a “person adversely affected” and had not suffered a compensable loss. The High Court rejected this, affirming that the Commonwealth is a legal person under Section 64 of the Judiciary Act 1903 (Cth) and must be treated the same way as any other person, and was explicitly recognized within the scope of the undertaking.

Is the Commonwealth Entitled to Compensation on the Undertaking of Damages?

Sanofi contended that the Therapeutic Goods Act 1989 (Cth) established a framework for compensation when patent rights are wrongly asserted, requiring patentees to issue a certificate to the alleged infringer in good faith, with reasonable prospects of success, and with intention to commence proceedings without delay. If issued on false grounds, Courts could order compensation for financial losses. Sanofi contended this excluded the Commonwealth from claiming under the usual undertaking. The High Court rejected this, noting the argument had already been raised before the Full Court, deeming its reframing of the same argument an abuse of the appeal process.

The appeal ultimately failed in a majority (3:2) decision. Some of the dissenting judgments are discussed below.

Alternative Opinions in the Judgment

Justice Jagot dissented, arguing that the primary judge and Full Court made a “clear error” by considering a counter-factual scenario influenced by acquired knowledge.

She contended the Commonwealth met its burden of proof, showing Apotex would have pursued PBS-listing for its clopidogrel products if not for the interlocutory injunction. Even without revoking Sanofi’s patent, Apotex had strong commercial incentives to enter the Australian market. Without the injunction, Apotex’s generic clopidogrel could have launched on 1 April 2008, securing exclusivity as the sole generic provider of clopidogrel for up to 12 months, yielding profits and also establishing long-term pharmacy relationships across Australia.

Justice Beech-Jones largely agreed with the above, concluding the Commonwealth’s appeal should succeed on ground 2. He emphasized that the interlocutory injunction blocked Apotex’s PBS application and at-risk launch, directly causing financial loss to the Commonwealth. The primary judge and Full Court’s rulings were therefore deemed “clear errors” and a “plain injustice,” as the case had not been properly assessed on its merits.

Essential Takeaways and Lessons Learned

This decision underscores the High Court’s reluctance to review lower court factual findings unless there is “clear error” or “plain injustice,” making it unwise for parties to selectively reference previously presented facts. This principle is also relevant in international patent disputes, such as in the U.S.

The ruling serves as a valuable lesson for pharmaceutical and biotech companies on the importance of maintaining thorough documentation for commercial decisions like product launches and PBS-listing, as strong records are essential when providing evidence.

Regarding damages, compensation is strictly limited to direct financial losses from injunctions.

Generic drug manufacturers seeking preliminary injunctions should carefully assess risks before launching their products prior to an innovator’s patent being invalidated. To mitigate these risks, they need compelling evidence that, if not for the injunction, they would have sought and obtained PBS-listing in Australia. An unsuccessful patent invalidity challenge could have significant repercussions for generic manufacturers.