Lasco Distributors Ltd v Pfizer Ltd
| Jurisdiction | Jamaica |
| Judge | Brooks,P Williams,Straw JJA |
| Judgment Date | 11 November 2022 |
| Neutral Citation | [2022] JMCA Civ 35 |
| Docket Number | SUPREME COURT CIVIL APPEAL NO 115/2017 & APPLICATION NO COA2020APP00028 |
| Court | Court of Appeal (Jamaica) |
| Year | 2022 |
Consolidated with
JM 2022 CA 109
[2022] JMCA Civ 35
THE HON Mr Justice Brooks JA
THE HON Miss Justice P Williams JA
THE HON Miss Justice Straw JA
SUPREME COURT CIVIL APPEAL NO 115/2017 & APPLICATION NO COA2020APP00028
SUPREME COURT CIVIL APPEAL NO 118/2017
IN THE COURT OF APPEAL
Vincent Chen and Leonard Green instructed by Makene Brown of Chen Green & Co for the appellant, Lasco Distributors Limited
Dr Lloyd Barnett and Miss Gillian Burgess instructed by Gillian Burgess for the appellant, Medimpex Jamaica Limited
Mrs Denise Kitson QC, Kevin Williams and David Ellis instructed by Grant, Stewart, Phillips & Co for the respondent, Pfizer Limited
Brooks, P Williams, Straw JJA
On 3 November 2017, V Harris J, as she then was (‘the learned judge’), awarded damages to Lasco Distributors Limited (‘Lasco’) and Medimpex Jamaica Limited (‘Medimpex’) against Pfizer Limited (‘Pfizer’). The assessment of damages arose from an undertaking as to damages, which Pfizer, in 2005, gave to the Supreme Court in applying for a grant of an injunction against Lasco, Medimpex and another company, NMF Pharmaceuticals Limited (‘NMF’), to prevent them from selling their respective generic versions of a prescription drug, amlodipine, for which Pfizer claimed patent rights. The court granted the injunction, but Pfizer's claim was later ruled to be invalid, and it was ordered to honour its undertaking.
The learned judge awarded Lasco approximately $273,300,000.00, and Medimpex, approximately $170,800,000.00, in damages. Those figures included interest on the various sums that comprised the award. Lasco and Medimpex are both dissatisfied with their respective awards and, in separate appeals, seek to have this court increase them. Pfizer has resisted both appeals, which were consolidated and heard together. Where it is convenient to do so, Lasco and Medimpex will be collectively referred to below as ‘the appellants’.
Although the appellants have filed numerous grounds of appeal, the essence of their respective complaints is that the learned judge erred in:
These complaints will be individually assessed below, but it is first necessary to give a fuller background to the case.
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a. miscalculating:
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(1) the size of the amlodipine market; and
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(2) the potential growth of that market;
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b. miscalculating the market share for the respective versions of amlodipine sold by each of the appellants;
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c. adopting an inappropriate market scenario and applying an inappropriate discount to the market scenario that she adopted;
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d. misunderstanding the post-injunction sales scenarios for the respective versions of amlodipine sold by the appellants; and
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e. applying an inappropriate rate of interest to the respective awards of damages.
Amlodipine Besylate or Salt of Amlodipine (‘amlodipine’) is one type of calcium channel blocker (‘CCB’), which is, in turn, one of several pharmaceutical methods used for treating hypertension. Pfizer developed amlodipine and marketed it, in tablet form, by the name ‘Norvasc’. It started selling Norvasc on the Jamaican market in 1994, and initially had a monopoly in the amlodipine market on the island. The appellants and NMF later entered that market by selling branded generic versions of amlodipine. Their respective products were also in tablet form. Medimpex started selling its product, ‘Normodipine’, in July 2001, and in January 2002, Lasco entered the market with ‘Las Amlodipine’. NMF also entered early in 2002.
In January 2002, Pfizer received Letters Patent for amlodipine and, shortly thereafter (by June 2002) sued the appellants and NMF for patent infringement. On 29 March 2005, in pursuing that claim, Pfizer sought and obtained the injunction restraining the three entities from selling their respective generic versions of amlodipine. In applying for the injunction, Pfizer gave “the usual undertaking in damages should it become necessary”. The undertaking is also referred to, in law, as a counter undertaking or a cross-undertaking. All three entities obeyed the injunction. The appellants contested Pfizer's claim but NMF took no further part in the litigation.
This court lifted the injunction on 31 May 2012, after affirming an April 2009 Supreme Court ruling that Pfizer's patent was invalid. It then ordered an inquiry into the damages payable to the appellants “consequent on the undertakings given for the grant of the injunction against them”. On 2 July 2014, the Judicial Committee of the Privy Council upheld those rulings. By the time the injunction was lifted, however, other entities were already selling generic versions of amlodipine in Jamaica. Pfizer did not attempt to use any judicial measures to prevent that activity.
In September 2016, when the inquiry into the damages got underway, Lasco had already re-entered the amlodipine market. Medimpex decided not to do so. Both, however, asked the Supreme Court to assess damages to compensate for the losses which, they said, they had respectively incurred as a result of the injunction.
In conducting the assessment, the learned judge received a massive amount of evidence: medical, scientific, demographic, sociological, marketing and sales. Each party called experts and other witnesses to support their respective positions. Both appellants sought to demonstrate that, but for the injunction, the amlodipine market would have expanded during the period of the injunction and that each of them would have increased their respective shares of that market. Pfizer sought to show that the amlodipine market would not have increased in relation to the other pharmaceutical methods of treating hypertension. It also generally sought to downplay the influence that it said each appellant would have had on the overall market for treating hypertension if the injunction had not been granted.
An important part of the evidence before the learned judge is a formulation called the “Rule of Halves”, which all the parties accepted as valid. The essence of the principle is that only half of all the people suffering from hypertension are aware of their condition; of that number, only half are being treated for the disease; and of those being treated, only half have the condition under control. The application of the rule is not restricted to Jamaica.
In her written judgment ( Pfizer Limited v Medimpex Jamaica Limited and others [2017] JMSC Civ 162), delivered on 3 November 2017, the learned judge organised and assessed all the evidence in a commendably clinical manner. She used the latter part to set out her analysis of the evidence and the conclusions that she had drawn. The process of analysis that the learned judge used may be summarised as follows:
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a. although she was assessing damages on a basis similar to that relating to breach of contract, it was not identical to that process, as “the damages can be assessed liberally but with logical and sensible adjustments”;
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b. she found that “the task is to reconstruct the hypothetical market ‘but for’ the injunction”;
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c. she employed “the conventional method of assessing the damages on a particular hypothesis and then … adjust the award by reference to the percentage chance of the hypothesis happening”;
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d. following the “Rule of Halves” and other evidence provided, she found that the market for all hypertension drugs was the number of people being treated for hypertension (200,000 persons annually), and, of that number, the subset being the amlodipine market would have increased during the period of the injunction (2005–2012) to between 20,000 and 22,000 persons per year (10%-11%); this converts to total sales of 7,300,000 to 8,030,000 tablets per year (a patient would take one tablet per day);
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e. she accepted that if a particular market scenario was discounted by 35%, its result is the one most likely to have occurred had the injunction not been in place;
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f. she found that over the period of the injunction, Lasco's share of the amlodipine market would have increased from 37.1% and plateaued at 60%, while Medimpex's share would have subsided from 44% to 25%, and Pfizer's from 18.9% to 10%;
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g. she found that the tablet prices to be used for calculating the losses should be “JMD$7.17 and JMD$13.46 for Lasco's 5mg and 10mg [tablets] respectively”, and “JMD$19.62 and JMD$28.35 for Medimpex's 5mg and 10mg”;
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h. she ruled that there should be no damages awarded for the post-injunction period;
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i. she awarded both Medimpex and Lasco damages for the stock, which they respectively had to destroy because of the imposition of the injunction; and
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j. she awarded interest, based on an agreement between the parties as to the rate, on each of the various sums (the hypothetical loss and the destroyed stock), at 8.23% per annum from 29 March 2005 (the date of the injunction) to 3 November 2017 (the date of the judgment).
The grounds of appeal are set out below, purely for convenience, as happily, learned counsel appearing in the appeal assisted the court by identifying the core issues involved.
Lasco's grounds of appeal are:
“(a) The finding that Mr. [Prem] Lobo [a chartered business valuator and an expert called on Pfizer's behalf] has done this calculation on numerous occasions is contrary to the evidence. Mr. Lobo is a forensic accountant and not an actuary. In any event the demeanour of the experts is not a factor in assessing the evidence that they have given. Further, the learned Trial Judge has failed to give any reasons why she prefers one expert to another in the event that there are conflicts between them.
(b) The trial judge has failed to correctly...
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