Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd (No 2)

[1996] FCA 638

NOT FOR DISTRIBUTION

CATCHWORDS

PRACTICE AND PROCEDURE - Discovery - objection to inspection by employee of opposing party - whether producing party's trade secrets or other confidential information revealed by documents - whether proffered undertaking of confidentiality sufficient protection to producing party - no issue of general principle.

ALPHAPHARM PTY LIMITED v ELI LILLY AUSTRALIA PTY LTD (NO 2)

No NG 432 of 1996

Lindgren J
Sydney
25 July 1996

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )        No NG 432 of 1996
GENERAL DIVISION                 )

BETWEEN:

ALPHAPHARM PTY LIMITED (ACN 002 359 739)
  Applicant

AND:

ELI LILLY AUSTRALIA PTY LTD (ACN 000 233 882)
  Respondent

CORAM:Lindgren J

PLACE:Sydney

DATE:25 July 1996

REASONS FOR JUDGMENT (No 2)

INTRODUCTION
By paras 1 and 2 of notice of motion filed on 11 July 1996, the respondent ("Eli Lilly") moved for orders pursuant to O 15 r 11 of the Federal Court Rules to the effect that by a date stipulated in the notice of motion the applicant ("Alphapharm") produce for inspection at the offices of Alphapharm's solicitors certain documents identified in Alphapharm's list of documents filed on 28 June 1996.  However, the issue which has divided the parties is more narrow in several respects than such an order might suggest. 

Alphapharm's objection has been to inspection by a particular person, Dr Fred Mason Perry Jr.  Dr Perry is employed by Eli Lilly and Company, the United States parent corporation of Eli
Lilly.  He has been so employed since 29 March 1965, a period of some 31 years.  He is currently employed in the position of "Research Adviser".  His responsibilities include advising the Vice President of Development and the Executive Director of Chemical Development of the parent company on issues relating to process development and new drug development.  As well, he supervises and advises approximately 35 senior organic chemists and research scientists on matters relating to chemical development who carry out their work at the parent company's research facilities at Shadeland, Indiana.

Alphapharm's complaint is as follows: the documents in question reveal Alphapharm's trade secrets and confidential information; inspection of them by Dr Perry would amount to disclosure to Eli Lilly and its parent company; those corporations are commercial competitors of Alphapharm; and an "undertaking of confidentiality" proffered by Dr Perry would not adequately protect Alphapharm.

This proceeding is fixed for hearing on 21 October next with an estimated hearing time of three weeks.  Dr Perry is in Australia in connection with Eli Lilly's preparation of its case.  The period of his stay is ten days from Monday 15 July. It was desirable that Alphapharm's motion be heard and decided as a matter of urgency.  The reason for this is that a timetable of interlocutory steps is running and it was desirable, if possible, that Alphapharm's motion be resolved in time for Dr Perry, before returning to the United States,
either (according to the result of the motion) to inspect the documents himself or to instruct a scientist independent of Eli Lilly and its parent corporation in connection with such inspection.  Accordingly, I heard the motion outside regular sitting hours on Thursday and Friday 18 and 19 July and gave my decision on Monday 22 July, indicating that I would publish my reasons later.  These orders were as follows:

"(1)Order that, in so far as the respondent's motion brought by notice of motion filed 11 July 1996 seeks the relief in paras 1 and 2 thereof, the motion be dismissed.

(2)Reserve liberty to the respondent to apply for an order for production for inspection pursuant to O 15 r 11 by Dr Perry or such other person as it may nominate.

(3)Order that

(a)the costs of the motion be reserved; and

(b)there be liberty to either party to apply for the costs of the motion."

I also gave this direction:

"DIRECT that inspection of all parties' documents take place by 2 August 1996 and that in the case of inspection by the respondent, that inspection not be by Dr Fred Mason Perry Jr."

The following are my reasons for making the foregoing orders.

BACKGROUND
The application in this proceeding was filed on 28 May 1996.  It follows an earlier proceeding No NG 351 of 1996 by Alphapharm against Eli Lilly ("the Preliminary Discovery Proceeding").  Both parties are manufacturers of pharmaceutical products.  The competition between them for market share in Australia is apparently keen.  The case relates to two anti-depressant drugs, one produced by each party.  That produced by Alphapharm is called "Zactin".  That produced by Eli Lilly is called "Prozac".

The active ingredient in both drugs is fluoxetine hydrochloride.  That chemical was invented by Eli Lilly's parent corporation.  It was the subject of Australian Patent No 484632 ("the Patent") granted to Eli Lilly's parent corporation with effect from 24 December 1974.  After an extension, the Patent expired on 24 December 1994.  This has made it possible for Alphapharm to develop its "generic" competitor, Zactin. 

Both Prozac and Zactin contain, in addition to fluoxetine hydrochloride, "fillers" or "excipients" or "non-active ingredients".  In Prozac, the excipient is starch.  In Zactin it is lactose.

Eli Lilly wrote a letter dated 16 April 1996 to pharmacists throughout Australia in relation to the two drugs, making certain allegations about Zactin.  The gravamen of the letter was that pharmacists should not accept that lactose is as satisfactory an excipient as starch.  Alphapharm complained to Eli Lilly about the letter.  Eli Lilly's solicitors responded to the effect that their client had in its possession material which fully supported the allegations.  Alphapharm, through its solicitors, asked Eli Lilly to produce the documents relating to two "findings" and a "claim" made in Eli Lilly's letter. The two findings were "that the reaction of fluoxetine with lactose can lead to reduced quantities of fluoxetine being available and the creation of various degradation products, some of which have yet to be precisely identified".  The claim was that "fluoxetine ... reacts with lactose to some extent".  Eli Lilly declined to produce the documents.

In the Preliminary Discovery Proceeding, Alphapharm sought an order pursuant to O 15 r 6 of the Federal Court Rules that Eli Lilly discover its documents supporting its alleged findings and its claim.  Relevantly, the issue in that proceeding was whether, for the purpose of the rule, Alphapharm had not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain relevant relief.  On 24 May 1996 I dismissed Alphapharm's application in the Preliminary Discovery Proceeding.  Alphapharm filed its application in the present proceeding on 28 May 1996 for such relief.

In the present proceeding, Alphapharm claims a range of orders. The application is supported by a statement of claim. The statement of claim pleads representations made in a letter from Eli Lilly to pharmacists in Australia dated 27 February 1996, representations in Eli Lilly's letter dated 16 April 1996 to which I earlier referred, and oral representations. These are pleaded to be to the effect that Zactin is not bio-equivalent to Prozac and that there is between 30-40% difference between Zactin and Prozac. The representations are said to have constituted contraventions of ss 52, 53 and 55 of the Trade Practices Act 1974.

Zactin was approved on 31 October 1995 by the Drug Safety and Evaluation Branch of the Therapeutic Goods Administration ("the TGA"), a division of the Commonwealth Department of Health and Family Services.  It is included by the Departmental Secretary in the Australian Register of Therapeutic Goods ("the ARTG") maintained under the Therapeutic Goods Act 1989 ("the TG Act"). Zactin was included in the ARTG as "Zactin fluoxetine 20 mg (as hydrochloride)" both as a "capsule bottle" and as a "capsule blister pack".

As from 1 February 1996, Zactin has also been listed on the Schedule of Pharmaceutical Benefits under the National Health Act 1953 and ("the Schedule") where it is "a" flagged to indicate that it is interchangeable with ("bioequivalent to") Prozac.

An applicant for registration of products such as Prozac and Zactin in the ARTG must satisfy the TGA as to their quality, safety and efficacy.  The applicant must put before the TGA, evidence of research and testing relating to those matters.  Alphapharm's application to the TGA for registration of Zactin was made on 10 May 1995.  It comprised two loose-leaf volumes comprising 910 pages in all which were "EXHIBIT GS-1 CONFIDENTIAL" to an affidavit of Gillian Sudlow sworn 29 April 1996 and filed in the Preliminary Discovery Proceeding.

In its statement of claim Alphapharm pleads, relevantly, as follows:

1. Fluoxetine hydrochloride

(a)is the active ingredient of Prozac, which has starch as an excipient or filler;

(b)is the active ingredient of Zactin, which has lactose as an excipient;

(c)is a very stable substance;

(d)does not react readily with other substances; and

(e)has not been shown by any published medical and scientific literature or testing to react with lactose when mixed with lactose and stored in capsules under the storage conditions recommended for Zactin capsules.

7......... ........ ........ ........ ........ .......

8.Prior to the approval of Zactin by the TGA for registration on the ARTG,

(a)the applicant commissioned or carried out all necessary scientific testing of the stability of the Zactin formulation under TGA guidelines and of the bioavailability of fluoxetine hydrochloride in Zactin as compared to Prozac; and

(b)the TGA satisfied itself of the bioequivalence of Zactin and Prozac and of the stability of the Zactin formulation."

The central issues in the proceeding go to the making and effect of the alleged representations on the one hand and their falsity on the other.  It is common ground that the documents which Alphapharm does not wish Dr Perry to see are relevant "in the discovery sense" to the issue of falsity.

The documents which Eli Lilly wishes Dr Perry to see and which Alphapharm does not wish him to see have been narrowed during the course of the current motion.  They are now those identified by the numbers 2 (a) and (g), 4, 6 and 8 in Alphapharm's List of Documents.  They are described in the List as follows:

"2.  Documents relating to application to Therapeutic Goods Administration for registration of Zactin:

(a)Copy of application to the Therapeutic Goods Administration ('TGA') for registration of Fluoxetine (Hydrochloride) 20mg capsules 'Zactin' by the applicant on 10 May 1995, (with replacement Volume 1) a copy of which forms exhibit GS-1 CONFIDENTIAL to the affidavit of Gillian Sudlow sworn on 29 April 1996 and filed in the Preliminary Discovery Proceedings.

(b) ... (c) ... (d) ... (e) ... (f) ...

(g)Copy of letter from the applicant to the TGA applying to extend the shelf life of Zactin capsules stored in blister packs, which comprises exhibit GS-7 CONFIDENTIAL to the affidavit of Gillian Sudlow sworn on 29 April 1996 and filed in the Preliminary Discovery Proceedings.

3......... ........ ........ ........ ........ .......

4.Documents comprising raw data relating to stability of Fluoxetine hydrochloride in the Zactin formulation - the raw data set out in these
documents for Batch Nos 031294, 080494 and 031694 (these batches were identical to the product marketed as Zactin in Australia except that there were minor differences in the capsule shells) is summarised in relevant submissions and requests to the TGA in the documents described in paragraph 2 above: [there followed in the List 58 paragraphs, each of which described a "manilla envelope containing original stability result sheet and raw data for" Fluoxetine capsules for a particular batch and in respect of particular conditions.]

5......... ........ ........ ........ ........ .......

6.Documents comprising raw data relating to analysis of capsules used for bioavailability and stability studies [there followed in the list nine paragraphs, each of which described a "manilla envelope containing original product test result folder for" a product identified by number and batch number.]

7......... ........ ........ ........ ........ .......

8.Documents relating to assay validation - many of these documents are included in submissions and responses to the TGA described in paragraph 2 above. [there followed nine paragraphs describing various documents relating to assay validation reports.]"

REASONING
Order 15 sub-r 11 (1) provides, relevantly, as follows:

"11 (1)Where ---

(a)it appears from a list of documents filed by a party under this Order that any document is in his possession, custody or power;

(b)........ ........ ........ ........ .....

(c)........ ........ ........ ........ .....

the Court may, subject to any question of privilege which may arise, order the party -

(d)to produce the document for inspection by any other party at a
time and place specified in the order; ..."

I was referred to cases relevant to questions of conflict between the legitimate interest of a party to litigation in protecting its trade secrets and confidential information from disclosure to another party which is a trade competitor, and that competitor's legitimate forensic interest in litigating in the usual way, and, in particular, with the full benefit of inspection of the other party's discovered documents.  I refer, in particular, to American Flange & Manufacturing Co Inc v Rheem (Australia) Pty Ltd (No 2) [1965] NSWR 193 (Myers J) at 199; Warner-Lambert Co v Glaxo Laboratories Limited [1975] RPC 354 (CA); Church of Scientology of California v Department of Health and Social Security [1979] 1 WLR 723 (CA) esp at 732E; Grant v Monsanto Canada Ltd (1979) 101 DLR (3d) 594 (Alberta/Waite J); Aktiebolaget Hassle v Pacific Pharmaceuticals Ltd [1991] 3 NZLR 186 (Gallen J); Magellan Petroleum Australia Ltd v Sagasco Amadeus Pty Ltd [1994] 2 Qd R 37 (Qld/White J); and Mobil Oil Australia Ltd v Guina Developments Pty Ltd (1995) 33 IPR 82 (Vic/CA). I have studied these authorities. As might be expected, they make it clear that each case must depend on its own facts and that once the confidential nature of the information is proved, a weighing exercise is involved leading to the making of a discretionary judgment.

I accept, as a starting point, that Eli Lilly is entitled to
have the subject documents inspected, not only by its legal advisers, but by its agent of its choice, Dr Perry, and that the onus rests on Alphapharm to displace that prima facie position; cf Church of Scientology case, supra, at 733G. 

The evidence relating to trade secrets and confidential information allegedly contained in Alphapharm's discovered documents is found chiefly in an affidavit of Stewart Chun Lai Cheng sworn 16 July 1996.  He joined the staff of Alphapharm in 1983 as a "Quality Control Manager".  He is a member of the Royal Australian Chemical Institute and a member of the Australian Society of Clinical and Experimental Pharmacologists.  In summary, Dr Cheng's evidence is to the following effect.  Alphapharm is one of the leading manufacturers and suppliers of generic drugs in Australia, currently having over 90 generic products registered for sale in Australia.  In order to formulate and develop generic products, Alphapharm has developed over the last 13 years:

" ... protocols for arriving at an appropriate product formulation and for carrying out studies to develop and then validate appropriate, high quality assays, related substances and dissolution test methods and for carrying out, with maximum efficiency, the studies required to generate the data for the registration of a product on the ARTG ('Alphapharm's Developments Techniques')."

To achieve registration of generic equivalents for a branded product, Alphapharm has also developed "its own expertise in product registration and a sophisticated approach to its applications to the TGA" which Dr Cheng calls "Alphapharm's Registration Technique".  He says that Alphapharm's Registration Technique covers such matters as:

"(a)the type of the tests and results it submits to the TGA in support of its application;

(b)its interpretation of the relevant regulations and guidelines;

(c)the compilation, presentation and format of its applications for registration; and

(d)the manner in which it responds to enquiries from the TGA."

With reference to the documents referred to in paras 2 to 11 of Part 1 of Schedule 1 to Alphapharm's List (Dr Cheng's affidavit calls them "Alphapharm's Confidential Documents" and, without prejudgment, so will I), Dr Cheng says, in paragraphs which were objected to but which I admitted as "submissions", that Alphapharm's Development Techniques are set out and explained in Alphapharm's Confidential Documents and that Alphapharm's Registration Technique is readily ascertainable from those documents.  He says that Alphapharm has also used Alphapharm's Development Techniques and Alphapharm's Registration Technique as the basis for obtaining registrations of generic products overseas.  His affidavit includes the following:

"13I believe that Alphapharm's Development Technique and Alphapharm's Registration Technique would provide commercial and competitive advantages to any entity seeking registration of a generic product either in Australia or overseas.  Some of Alphapharm's Confidential Documents could be used as a 'precedent' for any such entity compiling an application for registration of a generic drug in Australia, and could be modified for use in other countries around the world.

14........ ........ ........ ........ ........ .......

15I am aware that the respondent, or companies related to the respondent market generic products in Australia, such as Lovan, and may in the future market generic products in other countries.

16I believe that disclosure of Alphapharm's Development Techniques and Alphapharm's Registration Techniques to the respondent or an employee of the respondent or its parent company would deprive Alphapharm of the commercial and competitive benefits it obtains from those techniques.  Pharmaceutical companies which market original brands, including the respondent and companies related to it, do challenge in various countries, by litigation and objections to regulatory authorities, the registration of generic pharmaceutical products.  I believe that disclosure of Alphapharm's Development Technique and Alphapharm's Registration Techniques would give the respondent and companies related to it a significant advantage in challenging methods of developing and registering generic pharmaceutical products in Australia and in other countries.  I also believe that such disclosure would give the respondent and companies related to it a significant benefit or advantage in registering their own brands of generic products."

In addition to Alphapharm's Development Techniques and Alphapharm's Registration Technique, other bases of confidentiality are set out in paras 17 to 21 of Dr Cheng's affidavit which are as follows:

"17Alphapharm's Confidential Documents also include confidential information as to the methods developed and used by Alphapharm to
assay for fluoxetine hydrochloride, related substances and degradation products.  This methodology was developed by Alphapharm and is confidential to Alphapharm.  Alphapharm's Confidential Documents also include the results of stability tests, dissolution tests, and assays for fluoxetine hydrochloride, related substances and degradation products.  These results are also confidential to Alphapharm.

18Although the active ingredient and the excipients contained in Zactin are in the public domain, the quantitative formulation of Zactin is highly confidential to Alphapharm.  Alphapharm's Confidential Documents include details of the quantitative formulation of Zactin.

19Alphapharm's Confidential Documents also include information which has been provided to Alphapharm by third parties on a confidential basis.  Some of that information has been provided to Alphapharm by suppliers of raw materials who are competitors of the respondent or competitors of other companies in the Eli Lilly group.  That information includes matters such as manufacturing processes and analytical techniques.

20Alphapharm's Confidential Documents also include information about products which Alphapharm is currently developing and which have not yet been released onto the market.

21Alphapharm takes considerable care to ensure that its Development Techniques and Registration Techniques are kept confidential including the following:

(a)the Alphapharm Development Techniques and Alphapharm Registration Techniques are kept:

(i)in an area in the Applicant's Sydney offices which is locked and to which only the directors of the Applicant and limited employees have access; and

(ii)in the Applicant's research laboratories in Brisbane to which only authorised employees have access;

(b)the Alphapharm Development Techniques and
Alphapharm Registration Techniques are disclosed to the TGA only under an obligation of confidentiality;

(c)the Alphapharm Development Techniques and Alphapharm Registration Techniques are disclosed to persons outside the applicant only under confidentiality agreements;

(d)the Alphapharm Development Techniques and Alphapharm Registration Techniques are disclosed to employees of the applicant only if those employees need access to the information to carry out their duties."

(The final sentence in para 17 quoted above ("These results are also confidential to Alphapharm.") was objected to and admitted as a submission.)

Neither party has distinguished between classes of Alphapharm's confidential documents or between individual documents.  The documents are voluminous.  Alphapharm's application made on 10 May 1995 to the TGA referred to in para 2 (a) comprises two large loose-leaf folders comprising 910 pages.  The documents referred to in paras 4, 6 and 8 fill some six sizeable cardboard boxes.

While I have not read every sheet of paper referred to in paras 2 (a) and (g), 4, 6 and 8 of Alphapharm's List, I have examined random samples of them.  I think that generally they are of a kind which bear out Dr Cheng's claims.  I think that Alphapharm has made out a case that they contain information, disclosure of which to Eli Lilly would quite likely be damaging to Alphapharm's commercial interests.  A striking illustration is the formulation of Zactin itself.  Indeed, the
following passage occurs in the cross examination of Dr Perry:

"The formulation of Prozac is a trade secret, is it not? - Yes.

As you would understand it so too is the formulation of Zactin? - I would guess so.

If you are given access to the applicant's documents you would expect to learn the formulation of Zactin? - Not necessarily, No." (T 34.26-.30)

In fact, the formulation of Zactin occurs at page 86 of Alphapharm's application to the TGA.  As well, the formulation can, no doubt, be derived from inspection of other documents.

It is difficult to be certain that every page in the thousands of pages of documents referred to in paras 2 (a) and (g), 4, 6 and 8 of Alphapharm's List is confidential.  However, for the purposes of the present interlocutory application, I am satisfied that generally those pages do convey, expressly or by implication, information which constitutes a trade secret or is otherwise confidential.  It is important to remember, in this connection, that documents read together can reveal that which, read alone, they may not reveal.

Alphapharm has never resisted inspection of the documents by Eli Lilly's legal advisers, or, for that matter, by an independent expert or experts to be retained by Eli Lilly, subject, in each case, to the giving of an appropriate undertaking of confidentiality to the Court.  Alphapharm led affidavit evidence, both from its technical director, Dr
Cheng, and from independent experts, Dr John Peter Bartley of the School of Chemistry, Queensland University of Technology and Dr Michael Dawson, Senior Lecturer, Department of Chemistry, University of Technology, Sydney, to the effect that there are scientists in Australia with experience in organic or pharmaceutical chemistry and in reviewing and critically analysing applications submitted to the TGA for registration of drugs, who could be engaged to review Alphapharm's Confidential Documents, if necessary, having been briefed by Dr Perry in advance.  Ultimately, Eli Lilly accepted that this was possible. 

I do not think that Alphapharm's interests are adequately protected by Dr Perry's proffered undertaking of confidentiality.  This is not because of any deficiency in the form of the undertaking, as to which the parties are not at issue.  Nor is it because I have reason to think that Dr Perry would consciously breach the undertaking.  Rather, the reason is that in the nature of things, the knowledge acquired by Dr Perry would become part of his general knowledge which his duty and interest as an employee of Eli Lilly's parent corporation would or might well tend particularly with the passing of time, to compel him to use to its advantage. If this were to happen, Alphapharm could well be without effective remedy, Dr Perry being outside the jurisdiction.

Obviously, it would be more convenient for Eli Lilly to have the inspection carried out by Dr Perry.  He has been involved in research and development conducted by Eli Lilly's parent corporation with respect to fluoxetine since the early 1980s. His affidavit evidence includes the following:

"6.Commencing in January 1996 I directed and supervised the analysis of several generic formulations of fluoxetine by the research scientists employed by Eli Lilly and Company.  During the course of this analysis it was discovered that some generic formulations of fluoxetine were formulated with lactose as an excipient.  I am aware, from my knowledge of organic chemistry, that reducing sugars, of which lactose is one, react with secondary amines, such as fluoxetine.  This reaction is known as the 'Maillard reaction' which was first described in the research carried out by Louis Camile Maillard and published from about 1912.

7.I directed that further research be conducted by staff of Eli Lilly and Company, including the development of assay methods to detect and identify the existence and extent of degradation products that result from the reaction between fluoxetine and lactose.

8.As a result, research scientists employed by Eli Lilly and Company have conducted specific analysis of over 25 generic formulations of fluoxetine manufactured in countries including Finland, Italy, Austria, Poland, Jordan, Israel, Cyprus, Portugal, South Africa, Canada, Philippines, Indonesia, El Salvador, Costa Rica, Venezuela, Argentina and the applicant's own generic formulation of fluoxetine ('Zactin') sold in Australia.  This research is continuing.

9.I am informed by the legal advisers for the respondent and verily believe that an important part of the preparation of the respondent's defence to the applicant's claim will be an evaluation of the methodology formulation, research and testing by the applicant of its own generic formulation of fluoxetine and an interpretation and evaluation of the preformulation studies and stability studies performed by the applicant in connection with its product Zactin."

Dr Perry's affidavit describes how Eli Lilly's parent corporation changed the assay methodology which was designed to allow the detection of a greater range of impurities in fluoxetine and formulated fluoxetine products.  The result of that work was to develop a "gradient" method of HPLC.  He says that tests were conducted on various generic products, including Zactin, using both the "conventional" Isocratic method and the "gradient" method of HPLC developed earlier in 1996 by him or under his supervision.  In particular, he says that the use of the "gradient" method enabled a broader range of "degradation products" to be identified in the generic formulations which were tested.  Finally, Dr Perry's affidavit says this:

"There is no other person in the employ of the respondent or available to the respondent for the purpose of preparation of the case with comparable knowledge or familiarity with the technical methods which are required adequately to detect and identify degradation products in fluoxetine formulated products such as the applicant's product Zactin or to comment on the adequacy of stability testing which may have been undertaken by the applicant in connection with that product."

However, Dr Perry says that the particular "gradient" method which has been developed by Eli Lilly's parent corporation will be published.  Ultimately, Eli Lilly does not suggest that there is any difficulty in his communicating details of it to a chemist or chemists in this country so that Alphapharm's Confidential Documents may be inspected "vicariously" from Dr Perry's perspective.  Annexed to Dr Dawson's affidavit is a list of 16 scientists with experience in analytical and pharmaceutical chemistry, some of whom have had experience in reviewing and critically analysing applications submitted to the TGA for the registration of drugs.

The conclusion which I have reached is that at this stage, an order should not be made which would have the effect of permitting Dr Perry to inspect the documents remaining in dispute.  I presume that as a result Eli Lilly will wish, before Dr Perry returns to the United States, to engage one or more independent experts who, upon giving the appropriate undertaking of confidentiality, will carry out the inspection and report to Eli Lilly's legal advisers.  It is conceivable that in the course or as a result of that inspection, the view will be formed that some of the documents in issue are not truly confidential after all.  (Of course, Dr Perry has had to swear his affidavit without the benefit of an inspection of the documents.)  Further, it may be that a particular disadvantage to Eli Lilly will become apparent which is not evident at present.  For these reasons I would reserve liberty for Eli Lilly to re-apply for an order permitting inspection by Dr Perry. 

CONCLUSION
The motion should be dismissed.  Liberty should be reserved for Eli Lilly to apply for an order for production for inspection by Dr Perry.  I will hear the parties on costs [on Monday 22 July, prior to delivery of these Reasons, I heard the parties briefly on costs and made the order reserving costs referred to earlier.]

I certify that this and the preceding 20 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.

Associate:

Dated:25 July 1996

Heard:       18, 19 July 1996

Place:       Sydney

Decision:     22 July 1996

Reasons:     25 July 1996

Appearances:  Mr D E Grieve QC with Ms A H Bowne of counsel instructed by Mallesons Stephen Jacques appeared for the applicant.

Mr J M Ireland QC with Mr P Dwyer of counsel instructed by Dunhill Madden Butler appeared for the respondent.