Adding defendants in Glaxo v Sandoz

Glaxo's registered trade mark

Can you add defendants to a claim when their involvement was at the design stage of a product several years before the product was launched (and outside the limitation period)?

The Court of Appeal recently said "yes".  This post tells you why.

This decision is the latest in the long running trade mark and passing off dispute regarding the get up and packaging of Sandoz' AirFluSal an asthma inhaler which Glaxo Wellcome says infringes its trade mark and passes itself off as authorised by or otherwise connected to Glaxo's Seretide.  For background on the trade mark side of the dispute see Annsley's post here.

Sandoz' AirFluSal

The proceedings were originally only brought against Sandoz UK.  In May 2016, Glaxo applied to join Sandoz International, Aeropharm and Hexel as defendants (all proposed defendants are within the Sandoz group).  While Sandoz International was successfully added by agreement, the addition of Aeropharm and Hexel (both involved in the earlier stages of the preparations to launch AirFluSal) proved more contentious.

HHJ Hacon, sitting as a judge of the High Court, decided that the two potential defendants should not be joined because (amongst other things):

1. any marketing which they were involved in in the UK was minimal;
2. neither obtaining a marketing authorisation for the UK or conducting clinical trials constituted a common design to sell or promote AirFluSal in the England;
3. they were not sufficiently involved in the passing off acts to be part of a common design;
4. the passing off case could continue even if they were not added to the claim;
5. the supply of goods outside England (in Germany) was not an act of joint tortfeasance even if they had known that the goods were destined for the UK market (following ubrey Max Sandman v Panasonic UK Limited [1998] FSR 651); and
6. they were time barred by the Limitation Act because the acts that they were involved in took place more than six years ago.

Glaxo was granted leave to appeal by the judge.

Fisherman's Wharf... has nothing to do with Fish & Fish

Why did the appeal court grant permission to add the new defendants?

The key authority on joint tortfeasorship comes from Fish & Fish v Sea Shepherd (see the judgment being handed down on the UK Supreme Court blog here!).  As that blog notes:

The Court unanimously agreed on the test for liability [para 21]. Lord Toulson reasoned that a defendant will be jointly liable for the tortious acts of the principal if the defendant: (i) acts in a way which furthers the commission of the tort by the principal; and, (ii) does so in pursuance of a common design to do or secure the doing of the acts which constitute the tort. (Emphasis added)

The Court of Appeal noted that "if the promotion, marketing and sale of AirFluSal in the UK is tortious on the part of Sandoz UK, then it is clear that the commission of that tort has (on these allegations) been assisted by each of International, Aeropharm and Hexal [which designed the product including its get up]."

Sandoz UK came into the picture at the marketing authorisation stage, after the design decisions had been taken and is now involved in importing and selling the product.  That is the act in respect of which the other three companies are alleged to have combined with a view to its being done.

Martin Howe QC (for Sandoz) submitted that the work carried out by Aeropharm and Hexal was undertaken without any specific intention to sell in the EU.  An interesting argument which the Court left to be decided as a potential issue of fact for trial.  It was not sufficient to avoid a conclusion that "all three companies were party to a common design and a combination with a view to the resulting product being sold in the UK, as well as in other countries".

Limitation - it's a question of timing

Aeropharm and Hexel's involvement in the design process of AirFluSal took place more than six years ago.  Therefore, said Sandoz, Glaxo was statute barred under the Limitation Act 1980.

The Court accepted Simon Malynicz QC's submission that the cause of action could not accrue until Sandoz' product was marketed in the UK in late 2015.

The argument that Glaxo would have had a cause of action before AirFluSal was placed on the UK market because they would have been entitled to a quia timet (i.e. pre-emptive) injunction was firmly dismissed by the Court of Appeal (para [38]).  They noted that the possibility of obtaining such an injunction comes from the law of equity and Section 2 (i.e. the six year limitation period for tortious claims) does not apply to pre-emptive injunctions based on section 36(1)(a).  Although it is open to the court to deny relied on the basis of acquiescence (or similar) Section 36(2).

An interesting development in a colourful case.  No doubt this will not be the last decision in this long running saga...