Abbott GMBH and Co. KG v Apotex Pty Ltd
[2009] FCA 1366
•20 NOVEMBER 2009
FEDERAL COURT OF AUSTRALIA
Abbott GMBH & Co. KG v Apotex Pty Ltd [2009] FCA 1366
Therapeutic Goods Act1989 (Cth)
Patents Act1990 (Cth),Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618, 622-623
Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, 81-82[65]
Interpharma Pty Ltd v Commissioner of Patents (2008) 79 IPR 261, 267
Smith & Nephew Pty Ltd v Wake Forest University Health Sciences [2009] FCAFC 142, [51]–[52]ABBOTT GMBH & CO. KG and ABBOTT AUSTRALASIA PTY LTD (ACN 000 180 389) v APOTEX PTY LTD (ACN 096 916 148)
VID 796 of 2009
JESSUP J
20 NOVEMBER 2009
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 796 of 2009
GENERAL DIVISION
BETWEEN: ABBOTT GMBH & CO. KG
First ApplicantABBOTT AUSTRALASIA PTY LTD (ACN 000 180 389)
Second ApplicantAND: APOTEX PTY LTD (ACN 096 916 148)
Respondent
JUDGE:
JESSUP J
DATE OF ORDER:
20 NOVEMBER 2009
WHERE MADE:
MELBOURNE
UPON the applicants by their counsel undertaking:
(a)to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order below or any continuation (with or without variation) thereof; and
(b) to pay the compensation referred to in (a) to the person there referred to;
AND UPON the applicants by their counsel undertaking to refrain from selling a licensed or own generic of REDUCTIL into the Australian market before 1 January 2011 without first providing the respondent with one month’s prior notice of the launch date.
THE COURT ORDERS THAT:
1.Pending the hearing and determination of this proceeding or further order, but only for so long as the applicants do not sell, offer for sale or promote the sale of a pharmaceutical product, other than REDUCTIL, in which the active ingredient is or includes sibutramine hydrochloride monohydrate, the respondent be restrained (whether by its directors, its officers, its servants, its agents or howsoever otherwise) from making, selling or otherwise disposing of, and from offering to sell or otherwise to dispose of, any pharmaceutical product in which the active ingredient is or includes sibutramine hydrochloride monohydrate.
2.The parties have liberty to apply.
3.The costs of the applicants’ interlocutory application be reserved.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 796 of 2009
GENERAL DIVISION
BETWEEN: ABBOTT GMBH & CO. KG
First ApplicantABBOTT AUSTRALASIA PTY LTD (ACN 000 180 389)
Second ApplicantAND: APOTEX PTY LTD (ACN 096 916 148)
Respondent
JUDGE:
JESSUP J
DATE:
20 NOVEMBER 2009
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
The first applicant, Abbott GMBH & Co. KG, is the patentee of Australian Patent No 601167, which relates to an invention for a pharmaceutical compound called N,N-dimethyl-1-[1-(4-chlorylphenyl)cyclobutyl]-3-methylbutylamine hydrochloride monohydrate (more conveniently known as, and hereinafter referred to as, “sibutramine hydrochloride monohydrate”), said to be useful in the treatment of depression. The second applicant, Abbott Australasia Pty Ltd, is the exclusive licensee of the patent. On 2 November 2009, they commenced a proceeding in the court alleging that the respondent, Apotex Pty Ltd, was about to infringe the patent. They now seek urgent interlocutory injunctions to restrain the respondent from acting as it proposes.
The patent in suit has a priority date of 17 December 1985. It would have expired on 11 December 2006, but on 22 January 2003 it was extended for a further five years, such that it now expires on 11 December 2011.
The prior art identified in the complete specification is British Patent Specification No 2098602, which related to the invention of the compound sibutramine hydrochloride (ie N,N-dimethyl-1-[1-(4-chlorylphenyl)cyclobutyl]-3-methylbutylamine hydrochloride). On the preparation of this compound, the resulting samples were found to be hygroscopic, that is to say, they incorporated water from the atmosphere. The result was that variable amounts of water were so incorporated depending on the atmospheric conditions under which the sample was stored. This compromised the ability of the manufacturer to maintain a constant proportion of the active ingredient in the drug as prepared. In the invention the subject of the patent in suit, the solution to this problem was to bind to each molecule of sibutramine hydrochloride a single molecule of water, thus creating sibutramine hydrochloride monohydrate. It was found that this compound was not hygroscopic.
For present purposes, it will be sufficient to note that the patent in suit makes the following claims:
1. N,N-Dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine hydrochloride monohydrate in which one molecule of water is present for each molecule of N,N-dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine hydrochloride.
2. Pharmaceutical compositions comprising solid N,N-Dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine hydrochloride monohydrate in which one molecule of water is present for each molecule of N,N-Dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine hydrochloride together with a pharmaceutically acceptable diluent or carrier.
…12. A process for the preparation of N,N-dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine hydrochloride monohydrate in which one molecule of water is present for each molecule of N,N-dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine hydrochloride comprising treating N,N-dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine with hydrochloric acid or a solvent containing hydrochloric acid followed by isolation of the solid product.
The compound the subject of the patent in suit has, apparently, been found to be effective as a weight-loss drug, in which context the compound has the commercial value which is relevant for present purposes. The second applicant is the manufacturer, and the sponsor under the Therapeutic Goods Act1989 (Cth) (“the TG Act”), of a weight-loss drug included on the Australian Register of Therapeutic Goods (“the ARTG”) called “REDUCTIL”. The active ingredient in the drug is sibutramine hydrochloride monohydrate. It has been on the market in Australia since 2002. It enjoys a market share of about 36%. There are presently two other major weight-loss drugs on the market, “Duromine” (with a market share of about 47%) and “Xenical” (with a market share of about 15 %). REDUCTIL and Duromine are prescription medicines, while Xenical may be obtained over the counter.
The second applicant is also the sponsor of a second sibutramine-based weight-loss drug registered on the ARTG, called “ECTIVA”. Although so registered since November 2005, it seems that ECTIVA has not to date been commercialised.
In recent times, the respondent has developed its own weight-loss drug, in which the active ingredient is said (by the applicants) to be sibutramine hydrochloride monohydrate. Unless restrained, it proposes to manufacture and to market that with effect from 21 November 2009. The applicants claim that this would infringe the patent in suit.
In addition to British patent No 2098602 to which I have referred and the patent in suit, there are two other patents which are presently relevant. The first is the Australian patent No 545595. It was lodged on 31 March 1982, and would have expired on 31 March 2002, but was extended under s 70 of the Patents Act1990 (Cth) until 31 March 2007. The second is Australian patent No 633529. It was lodged on 21 November 1989, and expires on 21 November 2009. It claims an invention for a –
… method of treating obesity in humans which comprises administering to a human in need thereof a therapeutically effective amount of N,N-dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine hydrochloride in conjunction with a pharmaceutically acceptable diluent or carrier.
The respondent appears to accept that patent No 633529 stands in the way of the commercialisation of its generic weight-loss drug, but asserts an entitlement to proceed after 21 November 2009. It resists the suggestion that the patent in suit will prevent it from doing so.
It appears that the respondent has been aware of the existence of the patent in suit – and, inferentially, of its significance to the questions which are presently controversial – since at least October 2008. It has taken no step to challenge the validity of the patent until that which it has foreshadowed in the present proceeding. It seems that the first the applicants knew of the respondent’s intentions was when they received a letter from the respondent’s solicitors dated 5 October 2009. The solicitors said that the respondent had applied for registration of “generic sibutramine” on the ARTG for the indication of the management of obesity, including weight loss and maintenance of weight loss. They said that the respondent was of the view that, upon the expiration of patent No 633529 on 21 October 2009, there would be no bar to it marketing sibutramine in Australia for that indication. It intended to do so after 21 November 2009. The solicitors said that their client had considered the patent in suit at length, and was “resolute in its view that its marketing of sibutramine in Australia will not infringe any valid claim” in that patent. Correspondence followed between the parties and, on 2 November 2009, the present proceeding was commenced.
On an application for an interlocutory restraint such as the present, there are two main inquiries which the Court should undertake: first, whether the applicants have established a prima facie case, and secondly whether the inconvenience which the applicants would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the respondent would suffer if an injunction were granted: Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618, 622-623; Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, 81-82[65]. As to the first inquiry, “it is sufficient that the [applicants] show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial.”: ABC v O’Neill at 82[65]. In a patent case which involves a challenge to validity by way of defence –
… unless the case for invalidity is sufficiently strong (at the provisional level) to qualify the conclusion that, overall, the applicant has a serious question, or a probability of success, the court should move to consider the adequacy of damages, the balance of convenience and other discretionary matters. It is the applicant’s title to interlocutory relief which is under consideration, and the bottom-line question, as it were, is whether the applicant has a serious question, or a probability of success, not whether the respondent does in relation to some point of defence raised or foreshadowed.
Interpharma Pty Ltd v Commissioner of Patents (2008) 79 IPR 261, 267. It was common ground that I should take this approach in the present case.
Questions of validity aside, the respondent has one basis upon which to resist the applicants’ claims of infringement. It says that its product does not contain sibutramine hydrochloride and water in equimolar proportions. For the purposes of the present proceeding, the respondent provided to the applicants, on a confidential basis, certain technical information, including the results of analyses, about its own product. Dr James Rowe, a scientist with extensive relevant experience who gave evidence on behalf of the applicants, noted that that information required a sample of that product to have a water content of “between 5.0% w/w and 6.0% w/w”. He noted also that the water content of the samples analysed, and recorded in the information provided, were within that range. The theoretical water content of a compound which contained equimolar proportions of sibutramine hydrochloride and water is approximately 5.4%. This fell within the range referred to in the information provided by the respondent. It was one circumstance which led Dr Rowe to express the view that the respondent’s product was the compound referred to in the patent in suit.
The expert engaged by the respondent was Mr Paul Jones, a chartered chemist and registered patent attorney who specialises in chemical and pharmaceutical inventions. He calculated the theoretical percentage of water in sibutramine hydrochloride monohydrate as 5.387%. He noted that the Karl Fischer titration method had been used to establish the water content of the samples referred to in the respondent’s information. For the three samples in question, the water content was 5.2%, 5.2% and 5.7%. In what he described as the “long-term stability studies”, the moisture content varied; in the case of the first sample, from 5.4% to 5.7%; in the case of the second sample, from 5.3% to 5.7%; and, in the case of the third sample, from 5.5% to 5.8%. Mr Jones’ conclusion was that the respondent’s product generally contained up to 0.4% w/w more water in the active component than was required by the claims of the patent in suit.
In an affidavit in reply to that of Mr Jones, Dr Rowe said that he was aware of the usual range of experimental error associated with measurements using the Karl Fischer titration method, and that 0.4% w/w fell within those experimental errors. Additionally, he said that, if any measurement of the respondent’s product disclosed a water content greater than 5.387% other than by reason of experimental error, that result would be due to water being present as “surface adsorbed water” and not as chemically bonded water.
Counsel for the respondent accepted that Dr Rowe’s response to Mr Jones’ point as to the percentage of water in the respondent’s product was a legitimate one which could not be rejected on this interlocutory occasion. In my assessment, that concession was appropriately made.
I consider that, subject only to questions of validity to which I next turn, the applicants have made good their prima facie case that the product which the respondent proposes to commercialise is sibutramine hydrochloride monohydrate, and is the same product as is described in claims 1 and 2 of the patent in suit.
The respondent foreshadows a cross-claim alleging that the patent in suit is invalid as not amounting to a manner of manufacture, as not being novel, and as lacking an inventive step. It says also that the relevant claims are not fairly based in the specification, and are not clear or succinct. In ways to which I shall refer, it alleges that the patent is entitled to a priority date no earlier than 26 June 1990. One way or another, each of these grounds commences with an understanding of British Patent No 2098602.
In that patent, the preparation of sibutramine hydrochloride was explained, in Example 11, as follows:
The product of Example 10(c) (3.3 g) in the form of the free base, formic acid (2.99 g) and water (1 ml) were mixed with cooling. 37−40% Aqueous formaldehyde (3.93 ml) was added and the mixture heated for eighteen hours at a temperature of 85−95°C. Excess dilute hydrochloric acid was added and the solution evaporated to dryness. The residue was basified with 5N sodium hydroxide solution and the product was extracted into ether. Evaporation of the ether yielded a pale yellow oil which was dissolved in a mixture of propan-2-ol (4 ml) and ether (20 ml) and concentrated hydrochloric acid (2 ml) was added dropwise. The solution was evaporated and the residue dissolved repeatedly in ethanol and evaporated in vacuo to give a gum which was titurated with petroleum ether (b.p. 60−80°) to yield a yellow solid which was recrystallised from acetone. The product was N,N-dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine hydrochloride (m.p. 195−
197°C). (Formula 1 n=0; R1=isobutyl;R2=H; R3,R4=Me; R5=4-Cl; R6=H).Mr Jones noted in his affidavit that “dilute hydrochloric acid contains a significant amount of water”, and that the British Example 11 referred to substantially the same chemical reaction as Examples 12 and 13 in the patent in suit. These examples are as follows:
Examples 12 and 13
A sample (1g) of N,N-dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine was treated with 5M hydrochloric acid (1 ml) and the mixture was dissolved in the minimum quantity of a boiling organic solvent specified below. The resulting solution was allowed to cool to ambient temperature. A solid was collected by filtration, washed with the organic solvent and dried in vacuo at ambient temperature for 18 hours to give N,N-dimethyl-1-[1-(4-chlorophenyl)cyclobutyl]-3-methylbutylamine hydrochloride monohydrate the melting point of which is given below.Ex. Solvent Melting Point °C
12 acetone 194-197
13 ethanol 196-201
It was apparent to Mr Jones that the hydrochloride salt formed in accordance with the British Example 11 was sibutramine hydrochloride monohydrate, such as would be produced by following Examples 11 and 12 in the patent suit.
Dr Rowe responded to Mr Jones’ opinion by asserting that the product formed by following the instructions in British Example 11 would not inevitably be sibutramine hydrochloride monohydrate. He said:
In my opinion, the formation of sibutramine hydrochloride monohydrate from Example 11 of GB 2098602 is not inevitable at all. In Example 11 of GB 2098602, the starting material undergoes a number of processing steps. It is by no means inevitable that the presence of water associated with those steps will mean that sibutramine hydrochloride monohydrate is formed and I note that processes described in Example 11 do not correspond with the processes described in Examples 12 and 13 of the patent in suit and therefore it does not necessarily follow that Example 11 of GB 2098602 and Examples 12 and 13 of the patent in suit would give the same product.
Clearly there are scientific issues involved here which cannot be resolved on an interlocutory occasion.
To the extent that the respondent’s point relates to want of novelty, I am not persuaded that it is of such apparent strength as to undermine the conclusion that the applicants have a prima facie case on infringement. The applicants and their predecessors in title claim to have found that the preparation of sibutramine hydrochloride with dilute hydrochloric acid does not reliably produce a non-hygroscopic compound. Although, as pointed out on behalf of the respondent, they have been the only ones lawfully entitled to experiment in such matters, I remain of the view, prima facie, that the patent in suit constituted an advance over the British patent.
Allied to the respondent’s novelty point was their contention that the invention, so far as claimed in the claims referred to above, is not a manner of manufacture. It was said that, if not as the inevitable result of preparation with dilute hydrochloric acid, then at least by leaving the substance “on the shelf” for a time, what was ostensibly sibutramine hydrochloride would inevitably be hydrated to the point of molar equivalence. In this regard the respondent drew attention to one of the alternative methods of preparation proposed in the specification, as follows:
Alternative methods to prepare N,N-dimethyl-1-[1-(4-chlorylphenyl)cyclobutyl]-3-methylbutylamine hydrochloride monohydrate in which one molecule of water is present for each molecule of N,N-dimethyl-1-[1-(4-chlorylphenyl)cyclobutyl]-3-methylbutylamine hydrochloride include (a) contacting solid N,N-dimethyl-1-[1-(4-chlorylphenyl)cyclobutyl]-3-methylbutylamine hydrochloride, preferably in finely divided form, with a gaseous medium consisting of or containing water vapour and (b) suspending N,N-dimethyl-1-[1-(4-chlorylphenyl)cyclobutyl]-3-methylbutylamine hydrochloride in water or a water-containing medium.
It was submitted that, if the substance the subject of the patent in suit could be prepared simply by bringing sibutramine hydrochloride into contact with a gaseous medium containing water vapour, it could be prepared when such a medium was ordinary air. That is to say, one would achieve the invented substance by leaving sibutramine hydrochloride on the shelf. It followed, according to the respondent, that the invention was not a manner of manufacture. This point too, however, while interesting and quite possibly viable, does not undermine the applicants’ prima facie case. It was the very unreliability of the earlier process in the production of a compound that would not take on water that led to the invention itself. Further, whatever may happen “on the shelf” − over days, weeks or, it seems, months, depending on the moisture content of the air to which the substance is exposed – such would clearly be no way to make a product in commercial quantities that satisfied the regulatory requirements of the pharmaceutical industry.
The respondent advanced no separate submissions with respect to its foreshadowed case on lack of an inventive step.
The respondent’s next point related to the circumstances in which the first applicant sought, and achieved, an extension of the patent in suit, and an extension of the Australian patent for sibutramine hydrochloride, No 545595. Here it is necessary to observe that the second applicant’s product as registered on the ARTG is described as “REDUCTIL sibutramine hydrochloride”. On 22 March 2002, the first applicant applied for an extension of patent No 545595 under section 70 of the Patents Act, claiming that sibutramine hydrochloride was first approved for inclusion on the ARTG on 1 November 2001. The Commissioner accepted the request for extension on 12 April 2002. Then, on 24 April 2002 the first applicant applied for an extension of the patent in suit. It relied upon the same ARTG registration as that upon which it had relied in relation to Patent No. 545595. That application was supported by the statutory declaration of an officer of the second applicant, Ezekiel Solomon, made on 23 April 2002. He confirmed that the active raw material present in REDUCTIL was “sibutramine hydrochloride (monohydrate) that is the monohydrate form of sibutramine hydrochloride”.
By letter dated 26 June 2002, the Deputy Commissioner of Patents effectively expressed a serious concern that the same registered drug should be cited under section 70(3) of the Patents Act for the purpose of securing the extension of two distinct patents. In that letter, the Deputy Commissioner said:
In the request for the extension in respect of Patent 545595, you filed certain material from the ARTG that purports to indicate that a certain pharmaceutical substance is included on the ARTG. You also provided written submissions to that effect, and to the effect that the substance entered on the ARTG was in substance disclosed in the specification. In support of Patent 601167, you filed the same ARTG registration. However you provided further material to indicate that the registration was not in respect of the generic named substance, but in respect of the monohydrate form of that substance.
The circumstances around these applications are a matter of great concern to the Commissioner. Given the material now filed in respect of patent 601167, it is anything but clear to me that the Commissioner should have accepted the request on patent 545595. In particular, the material filed in respect of 601167 is suggestive that the goods actually entered on the ARTG are in respect of a pharmaceutical substance that is not in substance disclosed in patent 545595 – that is, the monohydrate form. That this is so is explicit in your letter of 24 April [‘it is clear that the “pharmaceutical substance” is sibutramine hydrochloride monohydrate’]- together with the ‘selection’ nature of patent 601167. Given that the applicant was aware of this, it is prima facie arguable that acceptance of that request on 545595 was obtained by misrepresentation – the misrepresentation being the omission to inform the Commissioner of facts relevant to the nature of the ARTG registration.
Given the seriousness of this issue you may wish to provide written comments, to go on the file of these patents, to respond to the observations above. In this regard, please note that the issue is the failure to provide the relevant information concerning the ARTG registration that was provided in respect of patent 601167 – and not whether, in the knowledge of that material, there is an argument that the extension is justified. I also draw to your attention to Prestige v Dart IPR 275, and ICI v Lubrizol 45 IPR 577. Please note that I am of the view that it is not open for the Commissioner to reconsider whether the necessary grounds to accept the application have been made out – see the express terms of s.76. Accordingly, if there is no opposition filed the Commissioner will proceed to grant the extension of term – despite the above, and whether or not you provide comments in response.
Apart from the issue of not providing the relevant information, there is a further issue that arises by reason of the ‘selection’ nature of patent 601167 vis-à-vis 545595. If the pharmaceutical substance that is the subject of the ARTG registration (i.e. the monohydrate form) is in fact ‘in substance disclosed’ in the specification of patent 545595 – which must presumably be the case in order for the extension to be justified on that patent on the basis of that ARTG entry – then prima facie patent 601167 is invalid by way of being anticipated by the disclosure of 545595. If such is the case, the Commissioner would be most concerned if a patentee knowingly maintains an invalid patent. In this regard, you should note that any representations made concerning patent 545595 will also be placed on the file of 601167 by reason of being potentially relevant to the validity of that patent.
It was submitted on behalf of the respondent that, the applicants having relied upon Mr Solomon’s declaration and secured an advantage thereby (the extension of the patent in suit), they should now be held to the proposition that it was the monohydrate form which was incorporated in REDUCTIL and which was, therefore, the subject of patent No 545595. As I understand the respondent’s position, either the applicants should be regarded as precluded from departing from the position they asserted in the correspondence, or that position should be treated as an admission by them that sibutramine hydrochloride monohydrate was disclosed by patent No 545595. It was also submitted that the very opinion of the Deputy Commissioner expressed in his letter ought to carry some authority with the Court; and that opinion, quite evidently, was that the patent in suit had been anticipated by patent No 545595.
To the extent that they are based upon some such doctrine as preclusion, I consider that the respondent’s arguments in relevant respects require a good deal more development than that from which they benefited at the interlocutory hearing. To be able to submit that the first applicant had obtained an extension to patent 545595 by a representation to the Commissioner from which it now seeks to depart was clearly to occupy a position of some forensic advantage. Exactly why, or how, it follows that the applicants should now be precluded from denying that that patent anticipated the patent in suit was not developed, and remains unclear. I am not persuaded that, in its present state of development, the point is so self-evidently a good one as to compromise what would otherwise be the applicants’ prima facie case on infringement.
Neither is it clear that the applicants’ conduct in March and April 2002 should necessarily be regarded as involving an admission that the patent in suit was anticipated by patent No 545595. I can perceive that the applicants might say that the pharmaceutically active agent in both patents was sibutramine hydrochloride, namely, the agent identified on the ARTG, while at the same time contending that, for the purposes of commercial production which was compliant with regulatory requirements, the monohydrate form was disclosed only by the patent in suit. In other words, I am not disposed to treat the events of 2002 as giving rise to an admission of sufficient forensic impact to deny the applicants the prima facie holding to which they would otherwise be entitled.
While I respect the views expressed by the Deputy Commissioner in the letter of 26 June 2002, and appreciate the clarity of those views as so expressed, I consider that the question whether the common reliance by both patents upon a single ARTG registration for the purposes of section 70(3) of the Patents Act necessarily means that the later patent was anticipated by the earlier is an open one, and cannot be resolved unfavourably to the applicants on an interlocutory hearing.
The respondent’s point with respect to the priority date relies upon an amendment to the patent in suit which was accepted on 26 June 1990. This amendment (or, more correctly, series of amendments) introduced into the specification an explicit requirement of molar equivalence between sibutramine hydrochloride and water. Hitherto, the specification had referred only to sibutramine hydrochloride monohydrate. The applicants appear to say that the amendment took the matter no further, as a molecule of sibutramine hydrochloride bound to a molecule of water is, necessarily, sibutramine hydrochloride monohydrate. However that may be, the respondent relies on section 114(1) of the Patents Act, and says that the date upon which the amendment was accepted must be treated as the priority date for the purposes of the present litigation. I am prepared to assume that that will be so, but it makes no difference to the resolution of this application. The establishment of a later priority date carries consequences for the validity of a patent only if accompanied by the identification of prior art which would not have been available as at the original date. On the material before the court, there is no item of prior art to which the respondent points which came into existence after the original priority date, but before 26 June 1990.
As I have said, the respondent foreshadows a case based upon section 40(3) of the Patents Act in its challenge to the validity of the patent in suit. However, such a case was not developed on the present application. It was not submitted that the claims were not fairly based on the matter described in the specification. Neither was it submitted that the claims, in their current form (ie one which makes it clear that there should be one molecule of water for each molecule of sibutramine hydrochloride) were not clear and succinct as to the exact chemical composition that was the subject of the invention.
For the above reasons, I take the view that the applicants’ prima facie case of infringement has not been materially undermined by the respondent’s grounds of invalidity. To the extent necessary, I shall consider the apparent strength of the applicants’ prima facie case, and of the respondent’s grounds of invalidity, in the course of considering the balance of convenience and other discretionary factors, to which I now turn.
The respondent submits that, in the “discrete” market in which sibutramine hydrochloride is sold, it would be possible to measure, with some accuracy, the sales lost to the second applicant as a result of the presence on that market of the respondent’s product. The evidence, such as it is on this interlocutory occasion, does seem to justify the conclusion that both parties keep very accurate records of their sales, and that the applicants make quite sophisticated projections of sales by reference to different competitive settings that may obtain into the future. Thus, according to the respondent, if the applicants ultimately succeed, damages will be readily quantifiable and will provide an adequate remedy.
The applicants contend that damages would not be an adequate remedy. To understand how they put this, it is necessary to refer to the means by which the second applicant markets and sells REDUCTIL, and the respondent markets and sells its generic pharmaceutical products. REDUCTIL is a prescription medicine. The second applicant employs a team of sales representatives who focus their promotional efforts upon medical practitioners. The object, quite clearly, is to have those practitioners prescribe REDUCTIL for such of their patients as require weight-loss therapy. It seems that, on the prescription form completed by practitioners, provision exists for the practitioners to indicate whether a generic substitute would be permissible in place of the branded medication prescribed. The applicants fear, not unreasonably in my estimation, that, if the respondent’s generic sibutramine product becomes available on the market, and is cheaper than REDUCTIL, many doctors, and perhaps doctors generally, will authorise the supply of that substitute as an alternative to REDUCTIL. Indeed, it seems quite improbable that doctors would not assist their patients to save money in this way.
The respondent, which presently markets a range of generic pharmaceuticals, does not concentrate its promotional activities upon medical practitioners. Rather, the respondent markets its products directly to pharmacies, either directly or by way of large pharmaceutical wholesalers. The object, it seems, is to place generic drugs at the disposal of consumers for those circumstances in which their use is permitted.
The applicants point out that the patent in suit has only about a further two years to run, and that, accordingly, REDUCTIL is a mature product in the final stages of its protected commercial life. If the market for sibutramine-based weight-loss drugs were affected by the entry of the respondent’s generic product in the way I have described, it is unlikely that the second applicant would maintain its current promotional spending, or, indeed, that it would maintain the current size of its primary care division. They ask rhetorically: if the only result of our sales efforts at the point of contact with medical practitioners is to increase the rate at which prescriptions for REDUCTIL are written in circumstances where a generic substitute is permitted, why would we bother to continue with those sales efforts? They have informed the court that REDUCTIL is a major element in the portfolio of products promoted to medical practitioners, and that the disappearance or diminution of the commercial benefit to be had from such promotion is likely to render it non-viable for the second applicant to maintain its team of representatives, at least in anything like its current state. Sales representatives would be made redundant, and there would, within such time as might be available after a successful result but before the expiration of the patent in suit, be little opportunity (or incentive) to re-hire and to re-train a new sales team in an attempt to restore REDUCTIL’s present position of advantage.
Regrettably, perhaps, this case is an example of those in which the disadvantages that might be suffered by the parties if an injunction were, or were not, to be made on an interlocutory basis seem to depend upon how the parties – and how other interests not before the court – would react in the circumstances. What I have set out in the previous paragraph is the applicants’ best prediction of how they would react to the absence of an injunction. In addition, the applicants’ case assumes that the failure of their present motion, and the resulting entry into the market of the respondent’s product, would inevitably call forth a range of other generic sibutramine drugs such that, at the conclusion of a presumptively successful case, the state of the market confronting REDUCTIL would be very different from that now existing.
Likewise the respondent asserts that it has put in the time and effort to bring its generic product to the point where ARTG registration is imminent. It is, it claims, entitled to the customary commercial benefits which accrue to the entrepreneur who is first ready with a generic drug upon the expiration of such patent or patents which may be standing in the way (which it says, in the present circumstances, is only patent No 633529). If it is restrained from doing so by reference to no more than a prima facie case, those special benefits will be lost forever, as its drug will, in effect, be no more than a face in the crowd of generic sibutramine drugs. It is, of course, implicit in this position that the respondent is the only one of a number of potential generic products to have taken the view that the patent in suit does not stand in the way of such a course. The point is that these submissions of the respondent, like those of the applicant, involve predictions and estimations about how it and others would react to the situation brought about by a decision of the court to dispose of the present motion in a particular way.
The respondent also points out that the second applicant appears to have its own sibutramine generic drug (other than ECTIVA) more or less ready to enter the market if and when REDUCTIL loses it monopoly. With some forensic effect, the respondent notes that an affidavit affirmed on 6 November 2009 by Mr Amr Bakry, a senior product manager employed by the second applicant, was amended by the deletion of the words “or shortly thereafter” from the following sentence.
Abbott is presently not in a position to licence any generic competitors because it does not have sufficient time to put the agreements in place (before the potential launch of the Apotex Product or shortly thereafter).
At the hearing of the motion, the applicants did not seriously resist the proposition that they would, if push came to shove, be in a position to participate in the generic market in some commercially efficacious way if no injunction were granted on the present motion.
I consider that the arguments on the motion are finely balanced. The balance of convenience is not, as is sometimes said, “all one way”. I am reluctant to place too much emphasis on the parties’ predictions and estimations about how they and others would act in certain scenarios (unreliable as such a course would inevitably be), but I cannot ignore the effect which the grant or refusal of an injunction would be likely to have on the market in which REDUCTIL is presently sold.
Commencing with my provisional findings with respect to the applicants’ prima facie case, I consider that their case on infringement is relatively uncomplicated and, as much as a patent infringement case may be, fairly obvious. The respondent did not propose that there might well be, at trial, an answer to Dr Rowe’s conclusion that its product was the monohydrate form of sibutramine hydrochloride. As things stand at present, it looks as though the real contest will be played out around the respondent’s cross-claim on validity. It was submitted on behalf of the respondent that that cross-claim would be an obviously strong one, but I am not disposed to see it in that light on the present state of the evidence. I would go no further than to regard it as a legitimate and potentially viable cross-claim that will require a serious response from the applicants.
An associated consideration is that this is not a case in which the respondent has been preparing to introduce a new product on to the market, and is surprised to learn of the suggestion that its proposed product would infringe an existing patent. That the respondent took the view that questions of infringement might well arise from the introduction of its generic product is apparent from its solicitors’ correspondence of 5 October 2009. Although I do not dismiss the importance of the respondent’s resistance to the applicants’ allegations of infringement as such, it seems that the respondent based its “resolute view” upon its assessment of the validity of the patent in suit. It then becomes relevant, and quite possibly critical, that the respondent knew of the patent in suit, and (I infer) of its potential to stand in the way of its commercial plans, as much as about a year ago. Yet no challenge was made to the validity of the patent until the applicants were on the threshold of losing the added protection of patent No 633529. Standing alone, this would account to an important discretionary consideration in favour of granting the relief which the applicants seek.
The respondent, however, resists that kind of approach. It refers first to the potential loss of the advantage of being the first generic sibutramine producer on to the market which would have been the result of its telegraphing its punches by taking revocation proceedings some time ago. While I can appreciate the position in which the respondent found itself, I am disposed to think that such considerations contribute little to the exercise of balancing the interests and concerns of the parties to this litigation. The questions in the litigation are whether the patent in suit is valid, and if so, whether it would be infringed by the respondent as it proposes. The applicants’ entitlement to have those questions resolved on a final, rather than on an interlocutory, basis is not, in my view, diminished by reason of apprehensions which the respondent entertains along the axis of its interaction with other parties. It is, of course, quite open for the respondent to have acted as it has, and I would not presume to express any criticism of that course. However, as between itself and the applicant, it should not expect that the court would be unsympathetic to an application for an interlocutory injunction in circumstances where the respondent has, it seems, consciously held back from making a timely challenge to the validity of the patent in suit. It seems that the respondent’s decision to proceed in that way was essentially a tactical one and, while I recognise the sense of that decision from the respondent’s own perspective, I remain of the view that the applicants’ discretionary case for interlocutory relief has been made the more persuasive by reason of the respondent having acted as it has.
The respondent next relies upon an obiter dictum of the Full Court in the recent case of Smith & Nephew Pty Ltd v Wake Forest University Health Sciences [2009] FCAFC 142, [51]–[52]
Second, the applicant sought to argue that the primary judge had, in effect, imposed on the applicant an obligation as a matter of law to ‘clear the way’, and relied too heavily on the fact that the applicant embarked on the alleged infringing conduct with its ‘eyes wide open’. We do not consider that the primary judge did raise either consideration to a proposition of law, or that he placed too much weight upon them.
We do, however, accept that it would be an error in considering whether the grant of an interlocutory injunction, in the context of an infringement claim, where the validity of the patent is in issue, to impose on a person who seeks to launch an alleged infringing product, an obligation to ‘clear the way’ by revoking the patent. Equally, the fact that a new entrant is prepared to take the risk of being restrained with its eyes wide open, should not be elevated beyond being a factor in the assessment of the many factors relevant to whether to grant an injunction.
The respondent submits that, for the court to regard it as a discretionary consideration that it withheld from challenging the patent for about the last year would effectively be to impose on it an obligation to have “cleared the way” before launching its own products. However, I do not think that the present circumstances fit that description. The existence of patent No 633529 effectively renders moot any question as to the appropriateness of the respondent standing out of the market in late 2008 and thereafter for the purpose of challenging the patent in suit. Patent No 633529 ensured that the respondent could not enter the market before 21 November 2009 in any event. It was not any step by the applicants in assertion of their rights under the patent in suit which has led to the respondents being out of the market since late 2008. The respondent chose to refrain from challenging the validity of the patent in suit for what I consider to be essentially tactical reasons. To expect it to live with the consequences of that choice does not, I consider, amount to the imposition of a requirement that it “clear the way”.
The third basis on which the respondent submits that I should not hold its own course of conduct since late 2008 against it is the correspondence between the applicants and the Deputy Commissioner of Patents to which I have referred to in para 24 above. As I understand its position, the respondent says that the applicants, for their own part, were conspicuously on notice that the patent in suit might be invalid by reason of the matters referred to by the Deputy Commissioner, yet they chose to take no such step as he suggested, thereby exposing themselves to the risk that the patent might at any time be found to be invalid. However, I do not think that the applicants’ presumptive title to an interlocutory injunction should be regarded as compromised by their failure to respond in a different way to the correspondence from the Deputy Commissioner. Be it accepted that they were squarely on notice that the validity of the patent in suit might at any time be challenged by reference to patent No 545595, nonetheless, for so long as they disagreed with the Deputy Commissioner, the applicants could only deal with challenges which were in fact made. Realistically, they had no choice but to await either a proceeding seeking to revoke the patent in suit or the kind of correspondence which they ultimately received from the solicitors for the respondent. That they did so should not, in my estimation, count against them in the weighing of circumstances necessary to dispose of the present application.
As against the above considerations (which generally favour the applicants), I recognise the attractiveness of the respondent’s submission that the calculation of the applicants’ losses as a result of the introduction of a generic substitute for REDUCTIL might be expected to be somewhat easier than the calculation of its own losses from being held out of the market for the period it takes to complete the litigation. The applicants would have the advantage of an established trading pattern over a number of years, and access to details of the respondent’s sales which, together, should provide a reasonably firm basis for the calculation of damages. If an interlocutory injunction were granted, however, it might be most problematic to estimate what sales the respondent might have achieved had it been permitted to enter the market. This is a valid pragmatic consideration, but, ultimately, its impact is diminished in a situation in which damages would not in any event be an adequate remedy for the applicants.
Do the facts of the present case involve such a situation? If the patent in suit had many years to run, I would have to hold that they did. I accept the applicants’ case that the market for weight-loss drugs in which the active ingredient is sibutramine hydrochloride would probably be forever changed by the entry of the respondent’s generic product. It would, in my view, be naïve to expect that the reputation of REDUCTIL, and the habits of doctors, pharmacists and consumers, could ever be restored to present levels thereafter. It is the circumstance that the patent in suit has only a further two years or thereabouts to run that, in effect, confines the applicants’ losses to that defined period. However, I am not prepared to take the pessimistic approach of assuming that no part of that two-year period would be available to the applicants after a presumptively successful result for them in this proceeding. The task of assessing damages will not, therefore (or at least not necessarily), be confined to the backward-looking process of comparing the second applicant’s lost sales with the sales of the respondent’s generic product. It would, I predict, be necessary also to address the future damage arising during the course of the second applicant’s attempt to restore the market position of REDUCTIL, and/or to consider whether, in the circumstances then obtaining, it ought to be regarded as entitled to view the remaining period of its statutory monopoly as too short to justify the making of such attempts and to look to the respondent for damages with respect to that period.
Taking into account the factors − and the imponderables − to which I have just referred, I am of the view that the respondent’s submission as to the ease and precision with which the applicants’ damages might be calculated is both too simplistic and too optimistic. I do not share its confidence that, under no circumstances that might now be reasonably anticipated, would the damages to which the applicants might legitimately claim an entitlement require more than a straight comparison of the sales of the two products in question. In the circumstances, I am not persuaded that damages would be an adequate remedy for the applicants, assuming that they are denied an interlocutory injunction but ultimately succeed in the proceeding
Taking into account the apparent relative strength of the parties’ cases on their merits and the practical and discretionary considerations to which I have referred, I am persuaded that an interlocutory injunction should go. The applicants will, of course, be required to give the usual undertaking as to damages. I shall also require them to give the following undertaking which, I was informed at the hearing, their counsel were instructed to give:
To refrain from selling a licensed or own generic of REDUCTIL into the Australian market before 1 January 2011 without first providing Apotex one month prior notice of the launch date.
Further, I shall provide that the injunction cease to have effect if the applicants introduce on to the market a generic sibutramine hydrochloride product.
I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. Associate:
Dated: 20 November 2009
Counsel for the Applicants: A Ryan SC with I Horak Solicitor for the Applicants: Mallesons Stephen Jaques Counsel for the Respondent: D Catterns QC with A Maryniak Solicitor for the Respondent: Freehills
Date of Hearing: 12 November 2009 Date of Judgment: 20 November 2009
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