IP-2024-000024 - [2024] EWHC 951 (IPEC)

Quantification of damage

The Claimant argued that damages in Period 2 could not be quantified adequately because it will be extremely difficult for the Claimant to restore prices to their original levels after trial if an injunction is wrongly refused. This argument is predicated on the assumption that there will be a price reduction, and I address it on that basis even though I do not agree with it.

Ms Shi gave evidence that, in her view, the Claimant would not be able to restore its current prices if the Defendant were taken off the market after trial. She said:

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The Claimant is also concerned that, if the Defendant is able to remain on the market and drops its prices to undercut ClearPetra, then it will have to drop its prices too. The lower prices will then become established over the time it will take for this action to reach trial and a final order (which I understand from Mr Cox to be in the order of 15 months away, possibly longer). I consider that it will be very difficult, probably impossible, for Well Lead (and BioSpectrum) to get NHS procurement to accept ClearPetra prices going up again after that length of time if the Defendant is held to be infringing the Patent and so has to stop selling the Seplou products (and so restoring the Claimant’s market exclusivity for suction sheaths).

Mr Cox said something to similar effect in his reply statement, albeit that it was based on information that he had obtained from Mr McQuilkin. According to Mr Cox, Mr McQuilkin’s view is that once the NHS has become used to lower prices for suction UASs, it will be challenging to increase them again just because competing products have been removed from the market. It can also take time for price changes to take effect (anywhere between 3 and 6 months) because of administrative delay or “lag”.

Against that, Mr George Reynolds said that, in his view, the Claimant would be able to raise the price after trial even if (contrary to his evidence) there was a price depression before trial and it transpired that an injunction was wrongly refused. This is because the NHS is an experienced and knowledgeable buyer who understands the impact that an infringing product can have on price. Furthermore, it also appreciates the importance of quality products and does not select products solely on price.

I prefer the evidence of Mr Reynolds on this issue. I agree that the NHS is a sophisticated purchaser who understands the impact that patents can have on pricing (up or down). I was also not persuaded that it would necessarily be difficult for the Claimant to raise its prices back to original levels if there was a price reduction. In this context, I note that the Claimant’s evidence assumed that the trial would not take place until at least May 2025, if not later. As I have said, it is now agreed that it will take place in January 2025. As a result, even if there is some price depression between now and trial, it will only be for a relatively short period of time (at most about 6 months). In my view, that is not sufficient time for the market to become entrenched in relation to price, particularly if, as Ms Shi says, there has only recently been widespread acceptance of suction UASs.

In any event, as noted in the Background section above Ms Shi also gave clear evidence about the Claimant’s sales forecasts, at least until February 2026. I set out that evidence here in full:

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The original ClearPetra Sheath was launched in 2016. The new Flexi ClearPetra Sheath was launched in March 2023. The Flexi ClearPetra Sheath is priced at £125 per unit in the UK whereas the original ClearPetra Sheath is priced at £165 per unit. The Flexi ClearPetra Sheath was priced lower than the original so as to be more competitive with existing conventional (i.e. non-suction) UASs. It is not intended that the price of the Flexi ClearPetra Sheath will change over the next 24 months but Well Lead is planning to drop the price of the original ClearPetra Sheath to a level similar to the Flexi so that the product has better access to trials and NHS procurement. It is presently estimated that 6,000 – 9,000 units of ClearPetra Sheaths will be sold over the next 24 months. I consider that most of these sales with be of the Flexi ClearPetra Sheath.

Mr Cox confirmed the accuracy of these predictions in his reply evidence, stating as follows:

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… The Claimant’s estimate of 6,000 to 9,000 sales is therefore realistic, provided that it retains exclusivity under the Patent, and Ms Shi has told me that the Claimant is confident in its accuracy on this basis. In fact, it considers that, with the combination of exclusivity (i.e. because it is granted the interim injunction sought by this Application), pricing at £125 and the growing interest in the Flexi ClearPetra Sheath, it should be able to increase its share of the UAS market to about 50%.

For completeness, I should note that Ms Shi also said that it was more difficult to predict how the market will develop beyond February 2026.

In my judgment, this evidence is particularly important. It means that the task of calculating damage in Period 2 if an injunction is wrongly refused will be relatively straightforward. I emphasise the word relatively because I accept, as the Claimant submitted, that a damages inquiry is an inherently difficult exercise because of the need to make predictions about what would have happened in the counterfactual. However, I bear in mind the guidance from the Court of Appeal in Neurim as set out above that damages should be adequate, not perfect. Now that the trial is listed (or will be listed) for January 2025, if the Claimant prevails it will be able to restore market exclusivity long before February 2026. As a result, by the time of any damages inquiry, the court will know the sales and price of the ClearPetra Sheaths which the Claimant has attained after trial and once its monopoly is restored, and will be able to compare that with the Claimant’s forecasts. Any shortfall can be adequately calculated and compensated in damages.

In the circumstances, I find that damages are an adequate remedy for the Claimant on all the facts and circumstances of this case. As a result, the Claimant’s application for injunctive relief fails at Stage 2.