Agreement With A Formula Calculating 'Actual Damages' Precludes Prejudgment Interest

Article by Theresa M. Weisenberger*

This article previously appeared in Last Month at the Federal Circuit November, 2011.

Judges: Newman (dissenting-in-part), Schall, Moore (author)

[Appealed from S.D.N.Y., Judge Stein]

In Sanofi-Aventis v. Apotex Inc., No. 11-1048 (Fed. Cir. Oct. 18, 2011), the Federal Circuit reversed the district court's decision to award Sanofi-Aventis ("Sanofi") prejudgment interest in addition to "actual damages" specified by its settlement agreement with Apotex Inc. and Apotex Corp. (collectively "Apotex"), and affirmed the district court's holding that Apotex Inc. is jointly and severally liable for all damages, and the district court's denial of Apotex's motion for leave to file a supplemental answer, affirmative defenses, and counterclaims.

The dispute underlying this third appeal to the Federal Circuit began in November 2001 when Apotex filed an ANDA with the FDA seeking approval for the sale of generic clopidogrel bisulfate tablets, marketed by Sanofi under the brand name Plavix®, before the expiration of U.S. Patent No. 4,847,265 ("the '265 patent"). Apotex's ANDA included a paragraph IV certification asserting invalidity. In response, Sanofi filed suit in March 2002, alleging infringement under 35 U.S.C. § 271(e)(2). Apotex counterclaimed, seeking a declaration of invalidity and unenforceability. Apotex received final FDA approval in November 2006.

Prior to FDA approval, Sanofi and Apotex reached a tentative settlement agreement ("the March 2006 agreement"). Under the March 2006 agreement, Sanofi granted Apotex a future license under the '265 patent to sell Apotex's generic product before patent expiration. Sanofi also promised not to launch an authorized generic during the pendency of the license. As a result of prior litigation involving Bristol-Myers Squibb Company ("BMS"), a holding company of one of the plaintiffs, the March 2006 agreement was subject to approval by the FTC and a consortium of state attorneys general. The FTC objected to the March 2006 agreement, including the provision precluding Sanofi's launch of an authorized generic.

In response, Sanofi withdrew the March 2006 agreement and the parties negotiated a second agreement in May 2006 ("the May 2006 agreement"). The May 2006 agreement did not expressly include the limitation regarding authorized generics, but the BMS executive negotiating on behalf of Sanofi orally promised that Sanofi would not launch an authorized generic during the...