Sandoz v Bayer: Liberal assessment limits in cross-undertaking damages claims clarified

In Sandoz AG & Ors v Bayer Intellectual Property GmbH & Ors [2025] EWHC 2533 (Pat), the High Court addressed the scope of liberal assessment principles when calculating damages under cross-undertakings in damages. Deputy Judge Michael Tappin KC struck out Sandoz's attempt to introduce allegations of Bayer's alleged wrongdoing during European Patent Office opposition proceedings and interim injunction applications, finding no nexus between such conduct and the assessment of compensatory damages.

Background

Following a previous judgement striking out Sandoz's account of profits claim, Sandoz sought to amend its Points of Claim to introduce allegations that Bayer had deliberately made false and misleading claims to the EPO regarding rivaroxaban's half-life and Phase I trial results, whilst dishonestly failing to disclose relevant prior art. Sandoz contended these matters justified both a liberal approach to damages assessment and presumptions in its favour when establishing loss in the counterfactual scenario.

Bayer accepted that liberal assessment principles apply to cross-undertaking inquiries, citing authorities including Les Laboratoires Servier v Apotex Inc [2009] FSR 3 and AstraZeneca v KRKA dd Novo Mesto [2015] EWCA Civ 484. The dispute centred on whether findings about Bayer's specific conduct could influence the degree of liberality applied.

The court's analysis

The court acknowledged established principles governing liberal assessment. Where a defendant obtains an interim injunction based on a patent subsequently held invalid, courts recognise that assessing the claimant's loss involves inherent imprecision. The wrongdoer principle requires damages to be liberally assessed, though this does not permit awards exceeding actual loss suffered.

Additionally, where uncertainties arise from a defendant's conduct, courts may make assumptions or presumptions favouring the claimant. As Morris-Garner v One Step [2019] AC 649 established, defendants who destroy evidence or wrongfully impede proof face adverse presumptions.

However, the court rejected Sandoz's broader proposition that the "character" of defendant conduct calibrates required proof standards. Sandoz's reliance on Ratcliffe v Evans [1892] 2 QB 524 was misplaced—that case concerned whether special or general damage must be proved in malicious falsehood claims, not assessment principles once liability was established.

Absence of nexus

The fundamental flaw in Sandoz's pleading was the absence of any nexus between the alleged wrongdoing and its consequences. Any difficulties determining the counterfactual arose because Bayer held a patent and obtained interim injunctions later found to be based on an invalid patent. Those facts alone justified liberal assessment.

The court illustrated this through one disputed matter: the number of companies that would have launched generic rivaroxaban upon SPC expiry absent the injunctions. Uncertainty about this question stemmed from the difficulty constructing counterfactuals, particularly where not all relevant parties would participate in the inquiry. Bayer's alleged conduct during opposition proceedings or when seeking injunctions could not affect this uncertainty's existence or extent.

No authority supported the proposition that proving Bayer's alleged acts and state of mind would warrant more liberal assessment or greater willingness to make favourable assumptions beyond what the mere granting and subsequent invalidity of the injunctions already justified.

Procedural implications

Permitting the amendments would significantly increase costs and complexity without advancing Sandoz's compensatory claim. Whilst Sandoz clearly wished to establish findings regarding Bayer's conduct, potentially for policy reasons or to hold Bayer accountable, this did not justify trying such allegations within the damages inquiry where they bore no relevance to quantum.

The court refused permission to amend and struck out the corresponding pleading in Sandoz's Points of Reply, confirming that liberal assessment operates within defined parameters linked to the wrongful obtaining of injunctions, not to broader allegations of misconduct during patent prosecution or enforcement.