How is the national character of patent protection to be reconciled with the transnational reality
of patent infringement? The latest (final?) round of the perindopril litigation between Apotex and
Servier raises this question in the context of monetary remedies. In Servier v Apotex 
EWCA Civ 593 the EWCA held that comity requires that English courts should not reward a
litigant for acts that infringe foreign patents. On this central point the Court of Appeal agreed
with Arnold J at first instance:  EWHC 730 (Pat) (blogged here and here). Whether the
doctrine of ex turpi causa, which was the focus of this litigation, is the appropriate doctrine to
forge transnational consistency is a different question, with no clear answer.
After its success in the Canadian litigation, Servier sought and ultimately obtained permission to amend its pleading to raise new defences to Apotex’s claim on the undertaking:  EWCA Civ 279. Servier made two arguments :
In September of 2010 Lewison J made an order staying the determination of the "cost of manufacture" point. This led to the present case, in which the only point before Arnold J at first instance was the public policy point, which was treated as an application of the ex turpi causa rule. The arguments provided comprehensive principled analyses of that rule, and after a thorough treatment of the case law, Arnold J held that Apotex’s claim was barred by the ex turpi causa rule. The stage was set for the appeal to be a leading case on ex turpi causa.
This was not to be. The day before the appeal was due to be heard Apotex’s solicitors wrote to Servier’s solicitors accepting in principle that there should be deducted from the damages awarded on the undertaking an amount equal to what the Canadian court would have ordered Apotex to pay Servier in Canada for infringement of the Canadian patent in manufacturing and exporting products for sale in the United Kingdom market had there been no interlocutory injunctions preventing sales in the UK. In effect, before the Court of Appeal, Apotex conceded the “cost of manufacture point” which had not been in issue before Arnold J.
Relying heavily on this concession, referred to as the “paragraph 26 concession,” the Court of Appeal allowed the appeal, and held that ex turpi causa did not bar Apotex’s claim on the undertaking. As the Court explained at :
Despite the focus on ex turpi causa, this decision is really about the importance of comity. This was the main principle motivating Arnold J’s decision: "the court will not award compensation under a cross-undertaking for the loss sustained by an unlawful business or where the beneficiary of the cross-undertaking has to rely to a substantial extent upon his own illegality in order to establish the loss. As a matter of international comity, it does not matter for this purpose whether the acts in question are unlawful under English law or under foreign law” , and the Court of Appeal agreed that “an important policy consideration, and possibly the principal one, is comity, that is to say respect for the law and courts of other countries” . Recognizing Apotex’s liability under Canadian law in the calculation of the damages on the undertaking is simply a more precise way of reflecting comity than using ex turpi causa, because the quantum of liability for the infringement of Canadian law will be measured by Canadian law. To deny the claim entirely as a matter of English law, using ex turpi causa, would entirely respect comity only if the Canadian liability happened to exactly offset the amount owing on the undertaking. It would not be entirely surprising if the offset were exact, as both systems calculate damages on fundamentally the same principle of causation, but there are also significant differences. Canadian courts, for example, are often willing to allow a patentee an election between damages and an accounting of the infringer's profits, and as the Court of Appeal pointed out at , there are different Apotex defendants in the English and the Canadian proceedings.
With that said, the case was argued before the Court of Appeal on the basis of ex turpi causa, and the paragraph 26 concession was formally treated as but one factor, albeit an important one, for holding that ex turpi causa was not applicable. Despite the thorough submissions of the parties, the Court declined to provide any principled treatment of the ex turpi causa doctrine, saying such an exercise would “complex, very lengthy, and in large part unrewarding. The decisions inevitably turn on their own particular facts. The statements of law or principle they contain are not all consistent or easily reconciled. The jurisprudence in this area has been an evolving one, but its evolution has not followed a consistent pattern” . On the facts, the Court of Appeal pointed to several factors that established that Apotex’s behaviour “is low on the scale of culpability in terms of the illegality defence” . While that is true enough, in this Kat’s view the discussion of the degree of Apotex’s turpitude unnecessarily muddied the waters. For example, one factor was that the facts established that Apotex had a good faith belief that the Canadian patent might be invalid . Absent such a belief, ex turpi causa might operate to bar a claim in a similar future case, notwithstanding that damages for the foreign (Canadian) infringement were accounted for, thus dragging an element of subjective intent into the damages assessment.
In any event, further development of these questions awaits future cases. For now, the principle of comity has become further established in patent remedies. Moreover, the approach to comity adopted by the Court of Appeal is, in this Kat’s view, the better one, though it was not open to Arnold J at first instance. Whatever the strategic considerations behind Apotex’s concession, it was fortunate for the development of the law.