Context: The rivaroxaban agent, which Bayer markets as the Xarelto blood-thinner medication, has been the subject of patent disputes in many jurisdictions. Just yesterday, we obtained confirmation from someone involved with the proceedings that the German part of Bayer’s EP1845961 (“Treatment of thromboembolic disorders with rivaroxaban”) has been revoked in its entirety by the Federal Patent Court of Germany. But for some time Bayer was indeed able to enforce it against competitors in various jurisdictions. One of those rivals, Sandoz, is seeking compensation for wrongful enforcement, and the High Court of Justice for England & Wales (EWHC) held a hearing last week on Bayer’s motion to dismiss Sandoz’s prayer for disgorgement of profits.
What’s new: We have meanwhile had the opportunity to analyze the parties’ arguments raised at the UK hearing of July 22, 2025 (last week’s Tuesday). While we can’t take a position on who is right or who will win, the two key takeaways are:
- The UK’s wrongful-enforcement damages system is centered around undertakings made by patentees when they enforce preliminary injunctions, limiting the related recovery proceedings to (more or less) contract disputes.
- South African patent infringement proceedings involve disclosures, which in this case resulted in the discovery of evidence that Sandoz used in the UK and possibly elsewhere.
Direct impact: Defending itself against a multi-billion dollar disgorgement claim, Bayer stresses that the undertaking based on which its enforcement took place does not have scope for that damages theory. Sandoz appears to be trying to prevail on a question of first impression, which is whether an alleged misconduct resulting in an ill-gotten patent later entitles wrongfully-enjoined parties to more than the undertaking literally says.
Wider ramifications:
- Should Sandoz (when all appeals are exhausted) be denied the relief it seeks only because of the way Bayer’s relevant undertaking was worded, then the EWHC may reconsider what commitments it requires at the enforcement stage, or there could even be legislative change to make wrongful-enforcement damages a statutory rather than contractual matter.
- South Africa is not a leading patent infringement jurisdiction, but the disclosures that are required there may actually be of cross-jurisdictional value, not only in pharmaceutical but also in information and communications technology cases.
When serious misconduct is alleged, we do not want to jump to conclusions unless we have access to evidence. Without taking a position on the merits, this is what Sandoz alleges (and which it says the disclosures in South Africa conclusively proved):
- The ‘961 patent, also described as the Once-Daily Patent, is specifically about taking the relevant medication just once a day.
- Bayer claimed that this dose was inventive because the half-life (the period it takes for the level of a substance in the blood to go down by 50%) of rivaroxaban was only 4-6 hours, too short for the medication to serve its purpose if administered only once a day.
- But Sandoz says that in reality the half-life was 9-12 hours, meaning that it was actually obvious (as of the priority date) that “once daily” was an option.
- Sandoz alleges that Bayer made misrepresentations to the European Patent Office (EPO), and furthermore should have disclosed certain prior art references when it lodged its application.
Bayer notes that none of the other companies seeking wrongful-enforcement damages, such as Hexal and Teva, brought a disgorgement claim, trying to portray Sandoz as an outlier. Of course, the way the law works is that a single party, out of a group, may still have a point. What is possible here is that Sandoz is more prepared than other litigants to try something undoubtedly ambiguous: to argue that the behavior at issue warrants a departure from the plain language of the undertaking in question. Sandoz advances a theory that breach of contract, in the most egregious of circumstances (which is not what they’re calling it, but it comes down to that), warrants a disgorgement of profits.
The difference between a disgorgement of profits and damages for having been wrongfully barred from entering the market for some time is huge. The former hurts and the prospect of it dissuades. The latter is just a cost of doing business, making enforcement profitable even if it turns out wrongful. If Sandoz (and others) had been able to offer their generics, the market would have had different dynamics. But for as long as the competition was enjoined, or had to fear an injunction, there was a monopoly.
There are various ways in which developments in one jurisdiction can influence decisions in another. Interestingly, it was a South African patent infringement proceeding that brought to light what Sandoz regards as conclusive evidence of major wrongdoing.
Apparently, Sandoz tried to obtain a non-confidential version of the South African decision so as to be able to present it in UK court. Bayer didn’t want that to happen, but then Sandoz’s lawyers found the text of the decision in the Westlaw database. A serendipity for their purposes.
The case caption and number are Bayer Intellectual Property GMBH [sic] and others v Austell Pharmaceuticals (Pty) Ltd and others [2023] JOL 62421 (CP). The proceedings took place in the Court of the Commissioner of Patents for the Republic of South Africa.
It was apparently because of disclosures that the South African forum required, and the proceedings there, that Sandoz (and others) developed a theory of patent prosecution misconduct. And the UK judiciary, in the course of the proceedings, then became aware of the South African judge’s related findings.
The UK also has some disclosure requirements, and it allows cross-examination. Continental European jurisdictions, at least for the most part, don’t. In the UK, Bayer apparently did not make certain arguments that had backfired in South Africa.
Counsel
For Sandoz
Barristers: Jeffrey Chapman KC and Gillian Hughes.
Solicitors: Pinsent Masons (lead: Gareth Morgan).
For Bayer
Barristers: Daniel Jowell KC, Miles Copeland and Kyra Nezami.
Solicitors: Allen & Overy Shearman Sterling.