The High Court delivered a landmark ruling on September 1, 2025, in Sandoz AG v Bayer Intellectual Property GmbH, striking out Sandoz's claim for an account of profits and clarifying the fundamental scope of cross-undertakings in pharmaceutical patent litigation. Deputy Judge Michael Tappin KC reinforced established legal principles that cross-undertakings serve compensatory rather than restitutionary purposes, providing crucial guidance for future generic drug market entry disputes.
Patent Dispute Over Anticoagulant Blockbuster
The litigation centered on Bayer's patent for rivaroxaban, the active ingredient in the anticoagulant Xarelto, which had endured substantial legal challenges including opposition proceedings culminating in a major trial before HHJ Hacon in 2024. When Sandoz indicated its intention to launch a generic rivaroxaban product upon patent expiry, Bayer secured interim injunctions to prevent market entry, asserting patent exclusivity.
Sandoz subsequently sought compensation under Bayer's cross-undertakings, claiming losses exceeding £3.9 million and pursuing an account of profits. The pharmaceutical company argued that absent the injunctions, it would have successfully supplied rivaroxaban to the market.
Legal Framework and Judicial Analysis
Bayer contended that Sandoz's claims should be struck out under CPR 3.4(2)(a), maintaining that the cross-undertakings' language precluded profit-sharing claims. The company emphasized that cross-undertakings create compensatory obligations rather than restitutionary remedies.
Judge Tappin's analysis drew extensively on established precedent, particularly Hoffmann-La Roche v Secretary of State for Trade and Industry and Abbey Forwarding v Hone. These authorities establish that cross-undertakings fundamentally serve to ensure justice by compensating parties wrongfully restrained by injunctions, not to penalize injuncting parties or mandate profit restitution.
The judgment emphasized that cross-undertakings operate within a compensatory framework designed to restore injured parties to their pre-injunction position. This principle distinguishes cross-undertakings from other legal mechanisms that might justify profit recovery, such as restitutionary claims based on unjust enrichment.
Court's Decision and Rationale
Tappin KC rejected Sandoz's alternative arguments concerning exceptional circumstances that might justify departing from established cross-undertaking principles. The judge found these contentions lacked substantial legal foundation or precedential support, describing them as fundamentally incompatible with the compensatory nature of cross-undertakings.
The ruling reaffirmed traditional patent litigation principles while providing clarity on injunction-related compensation. By distinguishing between legitimate compensatory claims and impermissible profit-recovery attempts, the judgment establishes important parameters for future pharmaceutical patent disputes.
Implications for Pharmaceutical Litigation
This decision carries substantial implications for intellectual property litigation strategy, particularly in pharmaceutical patent disputes involving generic market entry. The judgment clarifies that parties seeking interim injunctions face compensatory but not restitutionary exposure under their cross-undertakings.
The ruling suggests claimants must carefully scrutinize cross-undertaking language and frame their compensation strategies within established legal precedents. Future litigants cannot rely on exceptional circumstances arguments to transform compensatory undertakings into profit-sharing mechanisms.
The judgment also reinforces the importance of precision in drafting cross-undertakings and managing client expectations regarding available remedies. In the competitive generic pharmaceutical market, where interim injunctions frequently determine market timing, this clarity regarding remedy scope proves particularly valuable.
By reaffirming that cross-undertakings serve justice through compensation rather than punishment through profit recovery, the High Court has provided important guidance for pharmaceutical patent litigation while maintaining established legal principles governing interim relief.
