Sanofi-Aventis v. Apotex Inc.

Case Name: Sanofi-Aventis v. Apotex Inc., 659 F.3d 1171 (Fed. Cir. 2011) (Circuit Judges Newman, Schall, and Moore presiding; Opinion by Moore; Dissent by Newman) (Appeal from S.D.N.Y., Stein, J.)

Drug Product and Patent(s)-in-Suit: Plavix^® (clopidogrel bisulfate tablets); U.S. Patent No. 4,847,265

Nature of the Case and Issue(s) Presented: The issue on appeal was whether the parties' settlement agreement allowed for the imposition of pre-judgment interest.  This case marked the third appeal before the Federal Circuit in the parties' ANDA litigation concerning the blockbuster drug Plavix-the first affirmed the district court's grant of a preliminary injunction and the second affirmed the district court's judgment that the patent-in-suit was not invalid and not unenforceable. 

In May 2006, the parties entered into a settlement agreement that limited Sanofi's recovery of damages as follows: "Sanofi agrees that its actual damages for any past infringement by Apotex, up to the date on which Apotex is enjoined, will be 50% of Apotex's net sales...."  In between the time that Apotex launched at-risk and the district court entered a preliminary injunction, Apotex made nearly $900 million in net sales from marketing its generic product.  Relying on the terms of the parties' settlement agreement, the district court ordered Apotex to pay $440 million in damages (50% of Apotex's net sales) and further awarded nearly $108 million in prejudgment interest.  The parties' dispute hinged on whether the settlement agreement allowed for the imposition of prejudgment interest in addition to "actual damages" or whether the "actual damages" award was the full measure of Sanofi's damages. 

Apotex argued that Sanofi contractually limited its full recovery to 50% of Apotex's net sales, and further argued that when the parties contemplated a separate interest payment, the settlement agreement expressly provided for it.  In response, Sanofi contended that because the agreement was silent regarding prejudgment interest in the relevant section concerning damages, the district court correctly applied the general rule arising from the Supreme Court's decision in General Motors Corp. v. Devex Corp., 461 U.S. 648, 655 (1983) that prejudgment interest should ordinarily be awarded as part of damages. Sanofi further contended that under § 284 of the Patent Act, it had a statutory right to prejudgment interest that it did not need to preserve explicitly in the settlement agreement. The Federal Circuit found that the "parties intended that the phrase ‘actual damages' include all damages necessary to compensate Sanofi for Apotex's infringement," excluded an award of prejudgment interest.

Why Apotex Prevailed: (Contract law precluded imposition of pre-judgment interest).  The issue presented to the court was one of contract law, not patent law. By entering into the settlement agreement, Sanofi decided that the agreement itself-not the Patent Statute or its Hatch-Waxman provisions-would govern the appropriate measure of damages from Apotex's infringement.  The Court seized on the fact that prejudgment interest was referenced explicitly-that prejudgment interest should be awarded and how to calculate that interest-in a separate section of the agreement relating to inventory.  Because it was omitted from the relevant section in dispute, the Federal Circuit found that the parties intended prejudgment interest to be excluded from the "actual damages" awarded to Sanofi.