Recoverability under a Cross-Undertaking

March 26, 2024

What damages were recoverable from a claimant under a cross-undertaking given in support of an injunction?

Rohit’s client had obtained a parallel import product licence from the regulator, permitting it to import a pharmaceutical product from a  European Union member state and to sell it in the United Kingdom. The claimant manufacturer, objecting to the grant of the licence, obtained an injunction against our client, fortified by a cross-undertaking in damages, which prevented the client from operating the licence – and therefore from importing and selling the product in question – until a final decision as to the validity of the licence.

The High Court referred the case to the European Court of Justice. The parties and a number of governments of EU member states made submissions. In a leading addition to the ECJ’s evolving jurisprudence, that Court ruled that the regulatory licence had been properly granted.

The question which subsequently arose was what damages were payable under the cross-undertaking. The court held that the licence-holder could not recover the profits which might have been earned by a group company during the period of the injunction, but could recover reasonable royalties which it would have charged the group company in the absence of the injunction.

Judgments and media

For the judgment of the Patent Court, see R. v. Medicines Control Agency ex parte Smith & Nephew, intervener Primecrown Ltd [1999] RPC 705.

For academic and industry commentary on the case, see: › urteile › eughEuGH, 12.11.1996 – C-201/94 – Urteil des Gerichtshofes vom 12. November 1996. The Queen gegen The Medicines Control Agency, ex parte Smith & Nephew Pharmaceuticals Ltd und … › …PDFBirth of the parallel medicines trade – Pharmaceutical Journal › booksPharmaceutical Medicine, Biotechnology and European Law

For the precedential value of the case, see: 

Roger ter Haar, Remedies in Construction Law, Second Edition.