Key Facts
- •Innovate Pharmaceuticals Limited (Innovate) sued the University of Portsmouth Higher Education Corporation (UoP) for damages due to errors in a research paper on a liquid aspirin formulation (IP1867B or Glioprin).
- •The research paper, published in Cancer Letters, was retracted due to concerns about data integrity.
- •UoP's research involved in vitro and in vivo studies, with the latter conducted at Imperial College London (ICL).
- •A key dispute centered on whether UoP breached its contract by failing to exercise reasonable skill and care, and whether this breach was dishonest.
- •The contract included a £1 million limitation of liability clause.
Legal Principles
A party cannot contract out of its own fraud in inducing a contract.
HIH Casualty & General Ins v Chase Manhattan Bank [2003] UKHL 6
Whether a clause excludes liability for fraud in the performance of a valid contract is a matter of construction.
Frans Maas (UK) Ltd [2004] EWHC 1502
Limitation clauses are not viewed with the same hostility as exclusion clauses.
Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd [1983] 1 AC 966
Exclusion clauses mean what they say.
Photo Production Ltd v Securicor Transport Ltd [1980] AC 827
The Unfair Contract Terms Act 1977 (UCTA) allows courts to assess the reasonableness of exclusion and limitation clauses.
Unfair Contract Terms Act 1977
To prove dishonesty, it must be shown that the defendant knew the statement was false or was reckless as to whether it was true or false.
Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67
Outcomes
Judgment for Innovate for £1 million.
The court found UoP liable for breaches of contract due to errors in the Cancer Letters paper, but not for dishonesty. The limitation clause capped damages at £1 million.
Claim for loss of profits due to patent devaluation was dismissed.
This claim was excluded by the contract's limitation clause and/or the lack of proof of dishonesty.
Claim for the cost of repeating the research was partially successful.
Innovate was entitled to recover the cost of retesting but not for Clomipramine or non-GBM studies. The amount was capped by the contract's limitation clause.