1 February 2024
Innovate Pharmaceuticals Limited v University of Portsmouth Higher Education Corporation [2023] EWHC 2394 (TCC) involved a dispute between the University of Portsmouth (UOP) and Innovate Pharmaceuticals (IPL).
It centred around alleged misrepresentations made by the UOP's principal investigator (PI) concerning the results of a preclinical research programme for a lead compound conducted by UOP under a research agreement between the parties. IPL sought to recover damages for two heads of loss:
The evidence showed that UOP had charged IPL only £50,000 to carry out the research programme, the balance of the costs of the programme being covered by funding provided by a medical research charity.
The trial took place on 2 October 2023, and the judgment was handed down on 12 January 2024, finding that UOP was in breach of its obligation to carry out the research under the agreement with reasonable care and skill. The court found UOP liable in principle for both heads of damage claimed by IPL, but went on to hold that the effect of the liability clause in the research agreement was to limit UOP's liability to £1 million.
IPL is a research-based development-stage pharmaceutical company whose work includes the discovery and development of drugs for the treatment of brain cancer. UOP is a medical research institution and a centre of excellence for research into brain cancer - in particular a model for assessing transmission across the blood-brain barrier.
On 7 July 2016 the parties entered into a written agreement, under which IPL hired OUP to conduct a research programme into the properties of IP1877B, also known as Glioprin™ (the drug), for the treatment of brain tumours (the contract). The research programme was to be undertaken under the direction of Dr Richard Hill, the principal investigator and an employee of UOP at the time.
UOP expressly agreed to exercise reasonable skill and care to ensure the accuracy of the work performed and the information given (clause 11.1 of the contract), and to adhere to the general principles of honesty, fairness and integrity in all its dealings (clause 18.1 of the contract).
There was also a conventional limitation and exclusion of liability clause in the contract, which stated:
"11.4. Except as provided in clause 11.5 the University is not liable… for: any loss of profits, business, contracts, opportunity, goodwill, revenues, anticipated savings, expenses, costs or other similar loss; and/or any indirect, special or consequential damages or losses (whether for loss of profits or otherwise)".
"11.5. The liability of a party to another howsoever arising (including negligence) in respect of or attributable to any breach, non-observance or non-performance of this Agreement or any error or omission (except in the case of death or personal injury or fraudulent misrepresentation) shall be limited to £1 million" [emphasis added].
IPL claimed that the purpose of the contract was to put itself in a position to demonstrate to pharmaceutical companies the properties and potential uses of the drug. And IPL's ultimate intention was to enter into a development and licence agreement in respect of the drug with such a company.
In August 2018 Dr Hill allegedly made numerous false representations of the research programme results to UOP through both oral and electronic communications.
On 26 May 2019 Dr Hill published a scientific paper in the scientific journal 'Cancer Letters' (the paper). The paper made representations to the effect that the data obtained from the research programme showed that the drug suppressed resistance to epidermal growth factor receptor (EGFR) inhibitors. This is significant since a drug that reduces a tumour cell's ability to develop resistance to EGFR inhibitors would potentially be in high demand as an oncology mono- or combination therapy.
By August 2019, significant criticisms of the paper had emerged. In particular, a scientific research review website, 'PubPeer', launched a fierce attack on the paper and its data. In October 2019 a corrigendum was issued by 'Cancer Letters', making two corrections to figures and images in the paper.
In light of these criticisms, UOP launched internal disciplinary proceedings against Dr Hill to enquire into 'research misconduct'. UoP has a Procedure for the Investigation of Allegations in Research which defines 'research misconduct' as 'any breach of the UK Research Integrity Office’s Code of Practice' or of 'accepted procedures that seriously deviate from those commonly expected within the academic and scientific communities for proposing, conducting or reporting research'.
In early 2020 the disciplinary panel appointed by OUP found Dr Hill guilty of 'research misconduct'. OUP notified 'Cancer Letters' of this outcome on 11 March 2020.
On 25 March 2021, 'Cancer Letters' retracted the paper, stating in the retraction notice that this was "due to concerns regarding the legitimacy of images and data presented in the paper". The corrigendum issued in October 2019 was also found to contain errors.
IPL claimed that, in breach of UOP's obligations under clauses 11.1 and 18.1 of the contract; and the tortious duty of care owed by UOP to IPL, Dr Hill (for whose conduct UOP is vicariously liable) knowingly and/or negligently misrepresented the outcome of the research programme.
The issues which the court had to consider were:
The judge found that Dr Hill's representations and data, including in the paper, contained significant inaccuracies. Note that this finding was consistent with the decision of the UOP disciplinary panel. The judge went on to conclude that "UOP did not use all reasonable skill and care to ensure the accuracy of the work performed (which included the work of preparing the paper) or in the giving of information (including the information given in the paper)", with the result that UOP was in breach of clause 11.1 of the contract.
In relation to causation, the court found UOP liable in principle for both heads of damage claimed by IPL, but went on to consider the effect of the liability clause. It found that:
It followed that the second head of loss was excluded in its entirety. The judge assessed the first head of loss (costs of reperforming the research programme using a commercial CRO) at £1.4 million. Since this exceeded the cap on liability, he awarded the amount of the cap (£1 million) to IPL. The full judgment can be accessed here.
by Alison Dennis and Alice Matthews
by multiple authors
by Nicholas Vollers and Adrian Toutoungi