Arakis Ltd v Media Pharma GmbH & Co KG - [2008] APO 34

ABSTRACTS OF DECISIONS
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 776913 in the name of ARAKIS LTD

Title: The treatment of respiratory diseases

Action: Opposition under section 59 of the Patents Act by MEDA PHARMA GMBH & CO KG, compliance with a notice requiring production of certain documents, and objections to extensions of time to serve evidence in reply and a direction to defer service of evidence in reply until the notice to produce has been finally dealt with

Decision: Issued 16 December 2008.
Abstract

A notice requiring the production of certain documents relating to a clinical trial on which the evidence in answer was based was served on the applicant.
The applicant claimed lawful excuse for not producing the documents covered by the notice for the reasons that (1) the Commissioner did not have jurisdiction to issue the notice as the applicant was located overseas, (2) the documents in question were not in their possession or control due to contractual obligations owed to a third party and (3) the documents were not relevant to the opposition. The opponent nevertheless pressed for compliance with the notice to produce.
The opponent for their part argued that they were unable to properly respond to the evidence in answer until they were granted access to the documents sought by them or the fate of the notice to produce was otherwise decided. The opponent consequently requested that the time for serving evidence in reply be extended under regulation 5.10(2), or a direction be issued under regulation 5.10(1), to suspend the service of evidence in reply until the applicant’s non-compliance with the notice to produce had been resolved. The applicant objected to both requests.
All matters were heard concurrently. Found:

The questions of whether the Commissioner has extra-territorial jurisdiction to issue notices requiring production on persons located outside of the area delineated by section 12 of the Act, and whether the documents sought by the opponent were in the possession or control of the applicant, ultimately did not need to be decided;

The documents sought by the opponent are not relevant to the opposition;

The total extension sought by the opponent, although appropriate in all the circumstances, would not allow them any time to respond to the evidence in answer which would not be in the public interest in having the opposition decided on its merits. A direction to defer the service of evidence in reply for a specified time was accordingly issued which would also have the effect of regulating the progress of the opposition; and

Although a variation of costs was unwarranted, costs were awarded under schedule 8 against the applicant in view of the manner in which they had conducted their case.

PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No.776913 in the name of Arakis Ltd, opposition under section 59 of the Patents Act by Arakis Ltd, compliance with a notice requiring production of certain documents, and objections to extensions of time to serve evidence in reply and a direction to defer service of evidence in reply until the notice to produce has been finally dealt with

BACKGROUND

Patent application 776913 was filed on 9 April 2001 by Arakis Ltd (Arakis) under the provisions of the Patent Cooperation Treaty, and advertised accepted on 23 September 2004.
Viatris GmbH & Co KG filed a notice of opposition to the application on 23 December 2004 followed by a statement of grounds and particulars on 23 March 2005. An amendment under regulation 5.9 to the statement was allowed on 27 June 2005. Following a request made under regulation 5.3B on 21 April 2006, the name of the opponent on the notice of opposition was amended to Meda Pharma GmbH & Co KG (Meda Pharma).
The service of evidence in support and evidence in answer was completed on 7 December 2006 after both parties had been granted multiple extensions of time. Relevantly for present purposes, the evidence in answer includes a statutory declaration made by Dr Susan D Snape. On 8 December 2006, Meda Pharma gave notice of their intention to serve evidence in reply.
Evidence in reply was initially due for service on 7 March 2007, but this deadline was extended to 7 June 2007 without objection. On that date, Meda Pharma filed:
- A request for a further extension of time to 7 July 2007 in which to serve evidence in reply;
- A request for the Commissioner to issue notices on Arakis and Dr Snape requiring the production of certain documents relating to Dr Snape’s evidence in answer; and
- A request for the Commissioner to issue a direction to defer the service of evidence in reply until the notices to produce had been finally dealt with.
On 13 June 2007, the parties were advised that the Commissioner proposed to issue the direction sought by Meda Pharma. Arakis objected to the proposed direction, and additionally argued that the Commissioner had no jurisdiction to issue a notice to produce on Dr Snape. After a lengthy exchange of correspondence, on 17 October 2007 the parties were advised that the Commissioner had withdrawn the notice to produce issued on Dr Snape. Nevertheless, Arakis continued to vigorously resist the notice issued on them (the notice to produce).
During the course of events, Meda Pharma requested a number of additional extensions of time, all of which were objected to by Arakis. The request made on 6 July 2007 expressed the understanding that “the fee accompanying the enclosed Application for an Extension of Time shall be refunded in the event that a Direction under Regulation 5.10(1)(a) is subsequently made after the hearing has been determined.” The request made on 6 August 2007 similarly indicated that:
“This request for an extension of time has also been made on the basis that the Official fee accompanying the request will be refunded in the event that it is later determined by the Commissioner of Patents that the various extensions sought for service of Evidence-in-Reply and Opponent’s request of 7 June 2007 for a Direction under Regulation 5.10(1)(a) to stay this proceeding pending Compliance with the Notices to Produce were appropriate in all the circumstances.”
On 2 January 2008, Arakis requested that notices to produce be issued on the patent attorneys for Meda Pharma. The parties were advised on 11 March 2008 that the Commissioner considered the notices to be unduly broad in scope as they required the production of documents not relevant to the opposition proceedings. Arakis subsequently reframed the notices, but their breadth is still in issue.
A hearing was held in Canberra on 19 March 2008 to address the remaining areas of dispute, namely:
- The notice to produce, and in particular whether Arakis’ non-compliance with it is due to a lawful excuse;
- The requests to extend the time in which to serve evidence in reply; and
- The request for a direction to defer the service of evidence in reply until the notice to produce has been finalised.
Meda Pharma also pursued their request for a refund of extension fees.
Arakis was represented by Mr Paul Kilborn and Mr Sean Klinkradt of F B Rice & Co who appeared by telephone. Meda Pharma was represented by Mr Ben Fitzpatrick of counsel assisted by Ms Virginia Beniac-Brooks of Phillips Ormonde & Fitzpatrick.
SUBJECT MATTER
The invention the subject of patent application 776913 provides a dry powder composition comprising microparticles of glycopyrrolate for the treatment of respiratory diseases including asthma, chronic obstructive pulmonary disease (COPD) and cystic fibrosis. The composition may be prepared for delivery as an aerosol in a liquid propellant, for example for use in a pressurised metered dose inhaler (PMDI), or may be in a dry powder form for delivery using a dry powder inhaler (DPI).
Claim 1 is in the following terms:
“A medicament suitable for inhalation, for the treatment of a disease of the airways, wherein the medicament is a dry powder comprising glycopyrrolate and is formulated so that one unit dose enables the glycopyrrolate to exert its pharmacological effect over a period of greater than 12 hours.”
ISSUES FOR DETERMINATION
As indicated above, there are a number of issues for determination in these proceedings. These have all arisen directly from Arakis’ resistance to the notice to produce. I will therefore deal with the objections raised by Arakis to the notice to produce before turning attention to the other issues to be determined.
THE NOTICE TO PRODUCE
Justification
Meda Pharma have argued that they require production of the documents identified in the notice to produce to enable them to appropriately respond to the evidence of Dr Snape.
I note by way of explanation that Dr Snape’s evidence is based on the results of the so-called Phase 2 clinical trial supervised by her which involved a composition comprising glycopyrrolate in accordance with the claimed invention. Dr Snape has utilised the Phase 2 clinical trial results to support her opinion that an article by Schroeckenstein et al entitled “Twelve-hour bronchodilation in asthma with a single aerosol dose of the anticholinergic compound glycopyrrolate” from the Journal of Allergy and Clinical Immunology 82 (1):115-119 (1988) (the Schroeckenstein article), which is a prior art document regarded by Meda Pharma as highly relevant to their case, does not invalidate the claimed invention on the ground of want of novelty.
In short, Meda Pharma have sought the production of certain documents relating to the Phase 2 trial on which Dr Snape’s opinion is founded.
The Poster
On 19 November 2007, Arakis filed a publication entitled “NVA237, a once-daily inhaled antimuscarinic, provides 24-hour bronchodilator efficacy in moderate to sever COPD, Singh D, Corris PA, and Snape SD”, which is a copy of a poster presented at the American Thoracic Society International Conference on 19-24 May 2006 in San Diego, California , USA (the Poster). For ease of reference, Arakis had transposed the Poster into a document entitled “Transposed poster text and figures”.
According to Arakis, the Poster represents the full extent of the documentation relating to the Phase 2 clinical trial that they were entitled to produce. Nevertheless, on 20 December 2007, Meda Pharma pressed for full compliance with the notice to produce.
Lawful excuse
Section 181(2) of the Act provides that a notice for production may be resisted if the party opposing production has a lawful excuse.
In Attorney General (Cth) v Breckler 197 CLR 83, the majority of the High Court noted (at [17]) that:
“The phrase “reasonable excuse” has been used in many statutes but whether an excuse answers that description depends not only on the circumstances of the particular case but also on the purpose of the provision to which the exception is provided. However, the scope of the phrase “lawful excuse” appears to be more limited. A trustee will have a lawful excuse for failure to comply with an order, direction or determination of the tribunal if the trustee has a reason recognised by law as sufficient justification for such failure, whether by way of answer, defence, justification or other legal right or immunity.”
In Bank of Valetta Plc v National Crime Authority 164 45 at [34]-[47], Hely J referred to the test of Dawson J in Taikato v R 186 CLR 454 at 470:
“A reasonable excuse is no more or less than an excuse which would be accepted by a reasonable person. It is different from a lawful excuse …”
His Honour distinguished (at [42]) a reasonable excuse from “resistance based on some right, privilege or immunity recognised by the general law.”
Arakis asserts that it has a lawful excuse for not complying with the notice to produce on the following grounds:
- The Commissioner has no power to issue a notice requiring production on a person not located in Australia;
- The documents sought are not in the possession or control of Arakis;
- The documents sought are not relevant to the opposition proceedings;
- The notice to produce is in the nature of a notice for discovery;
- The documents sought are confidential in nature; and
- Meda Pharma has failed to provide security in the specified sums.
For reasons which will become apparent, I have formed the view that the documents sought by Meda Pharma are not relevant to the opposition proceedings. Consequently, the question of whether the Commissioner has jurisdiction to require production of these documents is something I do not need to decide. It is perhaps surprising though that Arakis have previously sought the exercise of the Commissioner’s discretion in their favour in these proceedings, and yet argue that they have not submitted to the jurisdiction of the Commissioner.
It is also not necessary for me to decide whether Arakis have possession or control of the documents sought. Nevertheless, it is worth mentioning in relation to this issue that Arakis claimed during the course of the hearing that they are prohibited from producing the documents in question under the terms of a commercial licence agreement (the Licence Agreement) between Arakis and Novartis International Pharmaceutical Ltd (Novartis). Arakis were accordingly requested to provide declaratory evidence subsequent to the hearing to substantiate the contractual duty allegedly owed by them. On 25 March 2008, I advised Arakis that the declaration should be made on their behalf by a person with direct knowledge of the trial, including Dr Snape’s involvement, and who is able to comment on the following:
- What documents did Dr Snape rely on in providing her evidence?
- Why are the documents no longer in the possession or control of either Dr Snape or Arakis?
- If Dr Snape no longer has possession of the documents she relied on in her evidence, what happened to those documents and when did they leave her possession or control?
- Dr Snape indicates in her declaration that the Phase 2 trials were conducted under her supervision. What was the nature of her relationship with Arakis at the time of conducting those trials?
- What is the basis of the commercial relationship between Arakis and Novartis such that Arakis is unable to request documents relating to the Phase 2 trial from Novartis?
Material filed subsequent to the hearing
On 30 April 2008, Arakis filed a statutory declaration made by Dr Robert Tansley together with Annexes A to C. Dr Tansley was employed by Arakis as Medical Director between November 2003 and March 2007, and in this role was signatory of the Final Study Report of the Phase 2 clinical trial.
In written submissions filed on 28 May 2008, Meda Pharma pointed to what I agreed were a number of significant shortcomings in Dr Tansley’s evidence. Consequently, on 27 June 2008, Arakis were advised as follows:
“The delegate is not satisfied that [Dr Tansley’s] Statutory Declaration addresses all the issues she raised and that are required for her to make her decision.
In particular:
·    The delegate agrees with Meda Pharma that the Tansley declaration fails to provide details about what instructions, directions or information were given to Dr Susan Snape by Arakis or its representatives in preparing her evidence and whether these documents are themselves the subject of a contractual arrangement between Arakis and Novartis.
·    The delegate has not been provided with a copy of the relevant terms of the Licence Agreement which would indicate what specific restrictions are placed on Arakis by the Licence Agreement.
·    There is nothing which confirms that Arakis sought the permission of Novartis to provide the Commissioner with a copy of documents sought by [the notice to produce] or any express statement from Novartis that they do not consent to the documents being produced.
As a result, the delegate would like Arakis to comment on these three issues before making her decision about whether Arakis has shown sufficient basis for non-compliance with [the notice to produce].”
On 4 July 2008, Arakis filed a statutory declaration made by Stuart Kynoch, the Business Development Director of the successor company to Arakis, who exhibits an extract from the Licence Agreement. Arakis also rely on a letter dated 2 July 2008 from a representative of Novartis to Mr Kynoch confirming that the “source data for the phase II trial that Sue Snape described in her declaration” constitutes confidential information which Novartis do not wish to be disclosed to a third party. I note here that confidentiality is not a lawful excuse as is indicated in Eli Lilly &Company v Novo Nordisk A/S [1999] APO 45. However, nothing presently turns on this.
On 11 July 2008, Arakis filed a statutory declaration made by Damian Slizys, a Senior Associate of FB Rice & Co, together with Exhibits A to F. On its face, Mr Slizys’ declaration is intended to respond to the first issue listed above, but a closer reading reveals that it in fact extends to the question of whether the documents specified in the notice to produce are relevant to the opposition proceedings.
Relevance
If the documents sought by Meda Pharma are in fact not relevant to the proceedings, that lack of relevance constitutes a lawful excuse for not producing them (Emory University v Biochem Pharma Inc [1998] APO 50).
Meda Pharma have argued that the documents they seek are likely to shed light on how the Phase 2 clinical trial led Dr Snape to conclude that the Schroeckenstein article is not novelty-destroying. Thus, as stated in their written submissions:
“Dr Snape provides expert opinion on [the Schroeckenstein article], beginning at paragraph 11 of her declaration. There is extensive discussion and analysis of the Phase II clinical trial results in paragraphs 15 to 29 of the declaration. There is a reanalysis of the Schroeckenstein results so as to allow a direct comparison between the teaching in Schroeckenstein and the teaching in the Phase II clinical trial results … The Phase II clinical trial results are clearly used by Dr Snape to interpret the teachings in Schroeckenstein and distinguish them from the teachings of [the present application] … This use of the Phase II clinical trial results by Dr Snape … clearly makes documentation relating to the Phase II clinical trial relevant to the validity of the claims, and therefore of at least adjectival relevance.”
Exhibit A to Mr Slizys’ above-mentioned declaration consists of a copy of a document (the Rule 132 Declaration) which was completed by Dr Snape for filing with the United States Patent and Trademark Office, and provides a publicly available clinical evaluation of the results reported in the Phase 2 trial. I observe here that the Rule 132 Declaration has been subsumed into Dr Snape’s evidence in answer.
Exhibits C to F to Mr Slizys’ declaration consist of copies of draft declarations prepared by FB Rice & Co using the Rule 132 Declaration and forwarded by them either through Arakis’ European attorneys or directly to Dr Snape for comment. The original draft (see Exhibit C) contains hand-written amendments presumably made by or with the knowledge of Dr Snape, but these are inconsequential. Relevantly, the original draft duplicates the opinions expressed by Dr Snape in her final declaration served as evidence in answer. I will have more to say about these opinions in due course. Mr Slizys has advised that “no other instructions, directions or information contained in documents or otherwise were provided by [the European attorneys] to Dr Susan Snape or to Arakis in relation to the sections of her statutory declaration concerning the Phase 2 clinical trials”.
I accept from the foregoing that Dr Snape’s evidence in answer as it relates to the Schroeckenstein article effectively goes no further than reproducing the Rule 132 Declaration. On the other hand, however, the reference in Dr Tansley’s declaration to “the Trial Data” and “the Trial Data Documents” justifies an inference that there are likely to be documents within the range of documents covered by the notice to produce which Dr Snape consulted when preparing the Rule 132 declaration.

It is of course the case that I have no knowledge of the actual content of these documents. Nevertheless, as confirmed by Emory University and F Hoffman-LaRoche AG v New England Biolabs Inc [2000] FCA 283 at [13] et seq, it is appropriate for me to consider whether they could be relevant to the opposition proceedings.
By their statement of grounds and particulars, Meda Pharma have alleged that the Schroeckenstein article deprives the claimed invention of novelty. The law on novelty is well settled. According to authority, an alleged anticipation must be the same as the claimed invention for the purposes of “practical utility”. In the present context this means that in order to make good their case as to alleged anticipation, Meda Pharma will be required to show that the directions given in the Schroeckenstein article would inevitably result in the claimed invention if followed by a skilled person. It also means, so far as the question of relevance is concerned, that I must decide whether the documents sought by Meda Pharma could support the case of alleged anticipation mounted by them.
As noted earlier, claim 1 is directed to a medicament suitable for inhalation for the treatment of a disease of the airways. The medicament is a dry powder comprising glycopyrrolate and is said to be formulated such that one unit dose enables the glycopyrrolate to exert its pharmacological effect over a period of greater than 12 hours.
The Schroeckenstein article has been introduced into evidence as an exhibit to a declaration made by Associate Professor Hak-Kim Chan on 22 December 2005 (see exhibit HKC-14) which comprises part of the evidence in support. As explained by Dr Chan, the Schroeckenstein article reports the clinical evaluation of the effectiveness of glycopyrrolate when administered to patients with asthma. So far as is relevant, Dr Chan asserts that the results of the evaluation shown in Figure 1 of the Schroeckenstein article would teach a skilled person that glycopyrrolate is an effective bronchodilator “for a significant period of time after 12 hours” consistent with claim 1.

Dr Snape’s response to this evidence is founded on a comparative analysis of the results of the Phase 2 clinical trial and those reported in the Schroeckenstein article.
As stated in paragraph 15 of Dr Snape’s declaration, the Phase 2 trial was conducted on a composition comprising glycopyrrolate “in accordance with the claims of the subject application” (my emphasis). It is therefore clear from the outset that the purpose of the Phase 2 trial was to evaluate the effectiveness of the claimed invention. Most notably, it did not aim to carry out the directions given in the Schroeckenstein article to see whether they would result in something within the claims.
The Phase 2 trial involved the administration of glycopyrrolate to patients with COPD, and not asthma as in the Schroeckenstein article. In paragraph 22, Dr Snape expresses the belief that the data shown in Figure 1 of her declaration (the Arakis data) demonstrates that glycopyrrolate maintains bronchodilation in COPD subjects for over 24 hours and is suitable for once-daily administration. To compare the Arakis data with the data presented in the Schroeckenstein article, Dr Snape draws attention to Figures 2 to 4 of her declaration in which:
“the data were transposed from the graphical representations … that are presented in Schroeckenstein. The Arakis data were taken directly from the Phase 2 clinical trial. Each of Figures 2-4 represents a comparison of similar doses.”
Once again, it is clear that the Phase 2 trial results were not derived from the teachings in the Schroeckenstein article.
Dr Snape concludes her evidence as follows:
“In summary I believe that the results reported above show that glycopyrrolate administered as a DPI to subjects with COPD appears to be a more effective bronchodilator at lower doses than when administered as a MDI to subjects with asthma. It is also evident that, as DPI, glycopyrrolate is effective for once-daily administration. This is neither disclosed nor suggested in Schroeckenstein. Moreover I do not believe that Schroeckenstein discloses or suggests a medicament for treating a disease of the airways in which the medication is formulated so that one unit dose enables the glycopyrrolate to exert its pharmacological effect over a period greater than 12 hours.”
It is therefore apparent that Dr Snape’s reliance on the Phase 2 clinical trial results is designed to demonstrate that as a matter of practical utility the claimed invention is distinguished from the Schroeckenstein article. However, this is converse to the case pressed by Meda Pharma that the Schroeckenstein article anticipates the claimed invention. As I have said, to constitute an anticipation the Schroeckenstein article must be shown to contain sufficient information to enable the claimed invention to be produced. I fail to see how the Phase 2 trial results could possibly assist the Commissioner to decide this question one way or the other. The trial results were not generated by following the directions provided by the Schroeckenstein article, and nor was Dr Snape’s analysis of the results reported in the Schroeckenstein article based on anything other than the disclosure of the article itself.

The documents covered by the notice to produce are concerned with the Phase 2 trial. For the above reasons, I am of the opinion that these documents are not supportive of the case of alleged anticipation that Meda Pharma seek to make out. The documents are therefore not relevant to the opposition proceedings.
I accordingly find that Arakis have a lawful excuse for not complying with the notice to produce.
Having finally dealt with the notice to produce, it is now open to me to consider the issues which have arisen for determination under regulation 5.10.
REGULATION 5.10 ISSUES
Legislative framework
The Commissioner is empowered under regulation 5.10 to issue directions relating to the conduct of opposition proceedings, and to extend the time within which a party may take a step prescribed by Chapter 5, including the service of evidence in reply. Regulation 5.10(5) relevantly provides that before granting an extension of time or giving a direction, the Commissioner must be reasonably satisfied that the extension or direction is appropriate in all the circumstances.
Extensions of time
The principles applicable to the broad discretion conferred by regulation 5.10 to grant extensions of time were considered by the Federal Court in Ferocem Pty Ltd vCommissioner of Patents 28 IPR 243, A Goninan & Co Ltd v Commissioner ofPatents 38 IPR 213, and National Starch & Chemical Company v Commissioner ofPatents 50 IPR 398.
These principles do not demand an imperative compliance with particular requirements, but rather as said by Burchett J in Ferocem involve:
“a balancing exercise, in which the competing considerations must be taken into account. These are the interests of the persons directly concerned in the application and opposition in question. These are also public interests, which are not necessarily all ranged on the same side. They include the expeditious disposal of matters in the Patents Office, and questions of cost, of efficiency, and of insistence upon the professional standards being maintained by those who deal with the office. But they also include, as Kitto J pointed out in Kaiser Aluminium & Chemical Company v Reynolds Metal Co (1969) 120 CLR 136 at 143, ‘the public interest that a serious opposition by a person entitled in fact to oppose the grant of a patent should be dealt with on the merits, rather than that it should be shut out in consequence of a failure in procedure, lamentable though the failure may be.’”
In Goninon, Sackville J said that in order to give proper consideration to the public interest in opposition proceedings being determined on their merits, it is necessary to consider the nature of the evidence in respect of which the extension of time is sought, and the significance of that evidence for the opposition. In National Starch, Goldberg J went further in saying that, in the absence of direct material on the point, the significance of the evidence sought to be adduced could be determined in the context of, for example, the patent specification, the grounds of opposition and the particulars relating to each ground, and the material which had already been filed.
Directions
In Mobay Corporation v The Dow Chemical Company 24 IPR 379 at 389, the delegate of the Commissioner likened the scope of the term “direction” in regulation 5.10(1) to the sense in which it is used in the courts:
“The next point is the fundamental question of what is the scope of the term “direction”? A direction for the conduct of proceedings is a well understood legal device used by the courts to manage the cases in their lists. I note the comments of Sheppard J in E I Du Pont de Nemours & Co v Commissioner of Patents, at 538: ”Judges have power, until the hearing is concluded, to make, and to continue to make, such directions as seem to them best suited properly and adequately to manage the cases in their lists … In complex cases it is usual for courts to hold extensive directions hearings with a view to finding out what the real issues are, what the extent of the evidence will be, what steps may be taken to confine or compress evidence and how long the case will occupy the court’s time.” Examples of the directions that courts can make can be seen in O 10, r1(2) of the Federal Court Rules. I believe that this is the sense in which the term “direction” is used in the Patents Regulations …”
It is therefore clear enough that as the administrator of the opposition system, the Commissioner has the power to give a direction with a view to the expeditious and orderly disposal of an opposition proceeding.
THE EXTENSION APPLICATIONS
Reasons for the extensions of time
The most recent extension application is the eleventh made by Meda Pharma and represents a total extension sought of 20 months to 7 November 2008. Before considering whether the extensions are appropriate in all the circumstances, it is instructive to set out the reasons why they have been requested.
The reasons given by Meda Pharma to justify the first extension of time requested by them are as follows:
“We have undertaken a preliminary review of the Snape and Searle declarations which form the Applicant’s Evidence-in-Answer.
Copies of the evidence have been forwarded to the Opponent for review and the Opponent is currently considering the evidence.
We are in the process of negotiating an agreement with the University of Sydney for the services of expert witness, Associate Professor Hak-Kim Chan who provided Evidence-in-Support.”

As stated earlier, this extension was granted unopposed. Meda Pharma next sought an extension of time for the following reasons:
“The Opponent has gone through a period of corporate reorganisation which have resulted in delays and disruptions in the Opponent’s consideration of the Evidence-in-Answer.
The European attorney instructing Phillips Ormonde & Fitzpatrick in these proceedings has also recently moved firms.
A technical expert has been located and has analysed the Applicant’s Evidence-in-Answer however the expert cannot provide a detailed report on the evidence until the basis for the opinions expressed by Dr Snape can be examined.
Reference is also made for a direction under Regulation 5.10(1)(a) and a request under Section 210(1)(c) for the Commissioner to issue Notices to Produce Documents in relation to the Preparation of the Applicant’s Evidence-in-Answer. Both of these were filed today and served on the Applicant’s Attorneys. An extension of time is also requested to allow the Commissioner sufficient time to consider these requests.”
These reasons were essentially repeated in support of the third extension of time sought by Meda Pharma. The following reasons were relied upon to justify the fourth extension of time:
“As mentioned in our earlier requests for an extension of time a technical expert has been located and has analysed the Applicant’s Evidence-in-Answer. Before providing a detailed report on that evidence it was considered necessary for our technical expert to consider and critically examine the basis of the opinions expressed by Dr Susan Snape in her evidence. Further time is therefore required for the Notices to Produce of 13 June 2007 directed to Dr Snape and the Applicant to be complied with; for our technical expert to consider this additional documentation and to produce a report. Further time is also required for our Australian Attorneys with the assistance of our European attorney to prepare a declaration based on the technical expert’s report and for that declaration to be forwarded to the expert for further input. Further time is required for us to review and approve the declaration; for it to be executed and served on the Applicant … Finally reference is made to the Applicant’s objections relating to the previous extensions of time applications and the Opponent’s request for a Direction under Regulation 5.10(1)(a). Further time is required to have these objections heard and determined.”
The same reasons lie at the core of all subsequent applications for an extension of time. The eighth extension application introduces the further reason that:
“During the past two months our Attorneys have interviewed an Australian expert. Further time is required to complete that evidence.”
The ninth extension application explains that further time is required to prepare a draft declaration for review and comment by the aforementioned Australian expert. The tenth and eleventh extension applications identify Professor David McKenzie as the Australian expert, and refer to the difficulties encountered by Meda Pharma in finalising his evidence.
The explanation of the delay
The reasons why the evidence in reply was not served in time are a relevant consideration, but a satisfactory explanation of the delay is not a mandatory requirement. It is also the case that in considering the explanation of the delay, it is legitimate to have regard to the reasons given to justify the total extension (Goninan at 223).
Meda Pharma have provided several reasons for the delay. They initially rely in part on a period of corporate reorganisation, and the transfer of their instructing European attorney to another firm. However, in my view, neither of these reasons justify the delay but rather indicate that Meda Pharma have not, as expected, worked diligently with whatever resources are available to them (compare with, for example, ZenonEnvironmental Inc v Memcor Australia Pty Ltd [2006] APO 24.)
Meda Pharma have most recently attempted to justify the delay by pointing to the difficulties they have faced in pursuing evidence from Professor McKenzie due to his competing work commitments and overseas travel. However, it has long been held by the Commissioner that activities of this kind do not constitute extenuating circumstances in the context of opposition proceedings such as may support an extension of time. As stated, for example, by the delegate in Minproc Technology Pty Ltd v Commonwealth Scientific and Industrial ResearchOrganisation 35 IPR 48 at 51:
“… I am also mindful of the ongoing work commitments of experts in other activities besides the need to provide commentary on evidence. However I do not think that these situations are different from the normal occurrences in opposition proceedings. Analysis of the evidence-in-answer, drafting declarations, forwarding them to experts in Australia and overseas, reviewing the evidence and declarations, awaiting replies, and prioritising other work commitments are routine activities in opposition proceedings. Normal timing provisions in the patent regulations make allowances for all these circumstances. I do not think these activities, alone, justify an extension of time.”
Given his standing in the field of medicine, Professor McKenzie’s work commitments could hardly be described as unexpected (compare with Novo Nordisk A/S v Eli Lillyand Company [2000] APO 14), and thus I see nothing to suggest that the delay in obtaining evidence from him is due to circumstances that are out of the ordinary. Further to this, I note from their written submissions that Professor McKenzie was engaged by Meda Pharma in November 2007. The eleventh extension application refers to a meeting scheduled with Professor McKenzie on 8 October 2008 “to progress his evidence further”. The clear implication here is that there is little or no prospect of concluding Professor McKenzie’s evidence even after the passage of some ten or more months following his engagement by Meda Pharma. This seems an inordinate amount of time.
This in turn exposes further inadequacies with Meda Pharma’s attempts to justify the delay. The second extension application, made approximately five months before Meda Pharma acquired the services of Professor McKenzie, refers to the location by them of a “technical expert”. On the material before me, that expert cannot be Professor McKenzie. No explanation has been provided of who this other technical expert is, or, more relevantly, why the evidence still under pursuit could not have been obtained from them rather than Professor McKenzie. There is no indication, for example, of whether the other expert has been found to be unsuitable or unwilling to act on Meda Pharma’s behalf. The same question arises in relation to Dr Chan who, as I have already mentioned, was retained by Meda Pharma to provide evidence in support in these proceedings.
While I appreciate that Meda Pharma are not required to make a full and frank disclosure of the circumstances surrounding the extension applications (Ferocem at 246), the reasons for the delay which I have considered to this point suggest to me that Meda Pharma have not pursued the collection of evidence in reply with due diligence. To the contrary, these reasons leave the impression that there has been minimum activity on the part of Meda Pharma in gathering evidence during the considerable period of time which has elapsed since evidence in reply first became due even though Meda Pharma prima facie have had a succession of potential declarants available to them.
Nevertheless, I am obliged to give “proper, genuine and realistic” consideration to the extension applications (Goninan at 224) which brings me to the principal reason upon which Meda Pharma rely, namely, that they have been unable to finalise the evidence in reply until the basis of the opinions expressed by Dr Snape in her evidence in answer can be critically assessed. As is indicated above, this reason has been central to all but one of Meda Pharma’s requests for an extension of time.
It will be recalled from my discussion of the notice to produce that Dr Snape has concluded from the results of the Phase 2 clinical trial that the claimed invention is not anticipated by the Schroeckenstein article. Meda Pharma argue that their ability to prepare an informed response to Dr Snape’s evidence has been inhibited by Arakis’ unwillingness to comply with the notice to produce, thereby denying Meda Pharma access to potentially relevant material on which Dr Snape’s opinions are founded.
The ongoing dispute which has arisen between the parties in relation to the notice to produce does not explain why Meda Pharma have not served any evidence in reply so far, particularly as they appear to be separately pursuing evidence from Professor McKenzie. Nevertheless, I do not perceive any deliberate attempt by Meda Pharma to delay proceedings. Their conduct is instead consistent with the notion that Meda Pharma have repeatedly sought the opportunity to counter the evidence of Dr Snape as expeditiously as circumstances permit, and that this repudiating evidence will form the core of the evidence in reply. It is also apparent that this intention to proceed in good faith has been hindered by Arakis’ continuing objection to producing the documents awaited by Meda Pharma for expert analysis. I do not mean to suggest that Arakis have acted inappropriately. However, the material before me overwhelmingly suggests that the need for the total extension requested is chiefly of Arakis’ own making.

Consequently, I believe that on balance Meda Pharma have shown that they have experienced difficulties of a kind which justify the need for an extension. Even if the reasons advanced by Meda Pharma were viewed less favourably, this would not foreclose proper consideration of other relevant factors (Ferocem at 248).
The public interest
As made clear in Ferocem, the public interests are not all ranged on the same side. While these interests are certainly in favour of seeing matters before the Commissioner pursued diligently, they must be balanced against the need to ensure that a serious opposition is dealt with on its merits.
I have no doubt that a serious opposition is in train. The statement of grounds and particulars together with the evidence in support raise substantial allegations as to the patentability of the claimed invention. These allegations have been strongly defended by Arakis as most notably illustrated by Dr Snape’s recourse to the Phase 2 clinical trial results. The clear intent of the evidence in reply is to directly address issues raised by Arakis, and thus its likely relevance to the opposition is beyond question.
The comparative importance of evidence in reply to the public interest was approached in this way by the delegate in Minproc at 53:
“While [the opponent] may be undertaking a serious opposition, the public has a lesser interest with the evidence-in-reply compared to the evidence-in-support or evidence-in-answer. The provision for evidence-in-reply is simply to allow the opponent a right of reply. There is no provision to allow the serving of new evidence at this stage of proceedings. Accordingly the public interest is not so enhanced at the evidence-in-reply stage over that interest in the preceding evidentiary stages. The public, through the Commissioner of Patents, is already aware of the basis of the opposition through the statement of grounds and particulars and the evidence-in-support …”
However, Sackville J subsequently warned in Goninan against assuming that the public interest was already protected if some evidence had been filed, albeit in that case evidence in support. Furthermore, it is clear that the public interest in the validity of granted patents favours a proper determination of the opposition. As stated by the delegate in Cook Incorporated v Endo VascularTechnologies Inc [1999] APO 14:
“There are disputed matters of fact as between the evidence-in-support of the opposition and the evidence-in-answer. I believe the public interest, in so far as it relates to ensuring that invalid patents are not granted, weighs heavily towards the granting of the extension sought by the opponents. This is in order that the delegate of the Commissioner in hearing the substantive opposition, with appropriate evidence in reply, has a more legitimate basis upon which to decide the disputed matters of fact.”
I consider this to be the case here. As stated earlier, the evidence in reply is to be directed to matters of significant disagreement between the parties, and is potentially relevant to a determination of the opposition on its merits. Indeed, given the contested level of disclosure in the Schroeckenstein article, it is conceivable that the evidence in reply may be equally (if not more) important than the evidence in support to reaching a just result.
The orderly progress of opposition proceedings is also important to the public interest. However, although the fate of application 776913 has been uncertain for a considerable period of time, it is clear that there would be no ultimate delay in granting the extension sought by Meda Pharma as a hearing on the merits has in any event been deferred pending resolution of Arakis’ non-compliance with the notice to produce. Furthermore, I believe that in this instance the public interest would be best served by providing Meda Pharma with an opportunity to obtain relevant evidence and thereby allow a more correct determination of the opposition. Meda Pharma would otherwise be precluded from effectively arguing their case on the relevance of the Schroeckenstein article to the claims which goes to the important ground of novelty.
The interests of the parties
The interests of Meda Pharma clearly lie in the grant of an extension of time to enable them to present their case in full. On the other hand, I not aware of any special circumstances which would disadvantage Arakis if the extension was granted (compare with Cook vEndo), and in fact their own actions have not demonstrated any real urgency in bringing the evidentiary stages of the opposition to a close.
Accordingly, I am of the opinion that the balance of the parties’ interests weighs in favour of Meda Pharma.
Summary on the extension applications
I have found that the total extension sought by Meda Pharma in which to serve evidence in reply is appropriate in all the circumstances. Accordingly, I grant Meda Pharma an extension of time from 7 June 2007 to 7 November 2008.
THE APPLICATION FOR DIRECTIONS
Meda Pharma have sought a direction from the Commissioner which would have the effect of suspending the service of evidence in reply until one month from the date the Commissioner notifies the parties that the notice to produce has been complied with, or that Arakis have a lawful excuse not to comply. The direction sought clearly relates to the conduct of the opposition.
As noted by the delegate in Mobay at 389, the power to give a direction is discretionary and therefore the Commissioner must be reasonably satisfied that the exercise of the power is appropriate in all the circumstances. In Affymax Technologies NV v Diversa Corporation [2001] APO 52, the delegate outlined the circumstances in which it would be appropriate to give a direction to defer the service of evidence:
“… regulation 5.10(1) is used, among other reasons, to defer evidence because of a pending action which is directly relevant to the opposition but which is outside of the immediate opposition proceedings. The “outside” action is likely to have a significant bearing on the evidence to be adduced and is generally outside the control of the parties concerned. In these cases, a direction would be given under regulation 5.10(1)(a) to suspend the time to serve evidence until a certain length of time … after the “outside” action has been finalised.”
In the present case, Meda Pharma’s request to stay evidence in reply was prompted by Arkis’ continuing non-compliance with the notice to produce and, as previously discussed, this “outside” action has to date precluded Meda Pharma from adducing evidence which is likely to have an important bearing on the outcome of the opposition. Consequently, the direction sought by Meda Pharma is one which, in light of Affymax, falls within the range of directions that are available under regulation 5.10(1).
However, the “outside” action confronting Meda Pharma has now been finalised in view of my finding that Arakis have a lawful excuse for not complying with the notice to produce. This removes the impediment to the completion of the evidence on which Meda Pharma intend to place reliance when responding to Dr Snape’s evidence. I have also decided that Meda Pharma have justified the need for further time in which to serve that evidence, irrespective of whether or not I were to direct that the service of evidence in reply be deferred. The question then arises of how to progress the opposition in a way best calculated to bring some finality to the time for serving evidence in reply while not losing sight of other relevant considerations.
I am not aware of any direct authority to support a particular course of action. A somewhat analogous situation arose in Boral Resources (NSW) Pty Limited v BSTHoldings Pty Limited [2003] APO 46 where the delegate granted the extension sought, yet also proposed a direction to defer the service of evidence until after the period of extension. The direction was proposed in order to facilitate the resolution of a dispute between the parties to the opposition regarding the production of documents which the delegate accepted had delayed the preparation of evidence. However, a dispute of this kind is no longer ongoing in the present case.
Nevertheless, it is clear that the delegate in Boral v BST was mindful of the fact that although the Commissioner carries a responsibility for regulating the progress of an opposition, the prospect of a delay in proceedings must be balanced against the risk inherent in deciding the merits of the opposition on the basis of incomplete evidence.
The grant of the total extension sought by Meda Pharma has reset the deadline for service of evidence in reply to 7 November 2008 and, as already mentioned, this brings the overall time Meda Pharma has had to serve evidence in reply to almost two years. On the other hand, the progress of the opposition, and hence the timing of this decision, has been protracted by a number of factors, most notably those relating to the fate of the notice to produce.
I am as a result concerned that although granted the total extension sought, Meda Pharma will not be afforded any opportunity to complete any activities they have already commenced or intend to pursue in the preparation of the evidence in reply. On the face of the material before me, these activities will most certainly involve the compilation of expert evidence to counter Dr Snape’s evidence in answer. To deny Meda Pharma the opportunity to properly prepare their case may lead to “rapid, superficial or incomplete proceedings” (Genelabs Technologies Inc v MurexDiagnostics 36 IPR 54 at 60).
Notwithstanding this concern, I must not overlook the desirability of operating the opposition system efficiently. The evidence in answer has been with Meda Pharma for approximately two years now. I therefore consider that a period of one month from the date of this decision should provide them with sufficient time to conclude the service of evidence in reply.
Accordingly, I direct under regulation 5.10(1)(a) that the time for serving evidence in reply will expire one (1) month from the date of this decision.
The expectation of the Commissioner is that Meda Pharma will move expeditiously to conclude the evidence in reply within this time, and it is to be noted in this regard that the public interest and the interests of Arakis would in the event of a further delay be increasingly relevant factors given the length of the delay to date.
REFUND OF EXTENSION FEES
Meda Pharma have asked that the fees paid by them in respect of the extension applications be refunded in the event that their request for a direction to suspend the service of evidence in reply was found to be appropriate in all the circumstances.
The prescribed fees for the purposes of section 227 of the Act are set out in Schedule 7 to the Patents Regulations, and include the fee for filing an application under regulation 5.10(2) for an extension of time (see Part 2, item 218). Thus as this fee becomes payable on filing an application for an extension of time, the fee is not available for refund irrespective of whether the extension is granted (which in any event has occurred here).
CONCLUSION
I have found that:
- Arakis have a lawful excuse for not fully complying with the notice to produce; and
- The total extension sought, although appropriate in all the circumstances, would not allow Meda Pharma any time to respond to the evidence in answer which would not be in the public interest in having the opposition decided on its merits. I have accordingly issued a direction to defer the time to serve evidence in reply for a specified time which will also have the effect of regulating the progress of the opposition.
COSTS
The power of the Commissioner to award costs is discretionary, so I must take all relevant considerations into account.
In matters before the Commissioner, costs usually follow the event. As noted above, I have found that Arakis have a lawful excuse for not fully complying with the notice to produce, and that Meda Pharma have made out a proper case justifying the need for further time in which to respond to the evidence in answer.
Meda Pharma have sought costs over and above the schedule of fees in light of Arakis’ conduct. Variation of the scale of costs has been considered by the Commissioner on a number of occasions. The practice that has developed is based on the principles applied by the Courts in similar situations. The basis principles are spelt out in decisions such as Re Wilcox; Ex parte Venture Industries Pty Ltd and Others 141 ALR 727 where Cooper and Merkel JJ said that the scale could be varied “where there may be some special or unusual features in the case.”
I do not consider that anything unusual or special has arisen in these proceedings such as to warrant an award of costs above the schedule. Nevertheless, I share Meda Pharma’s dissatisfaction with the manner in which Arakis have conducted their case. Arakis’ prolonged resistance to the notice to produce has been founded on grounds that are entirely inconsistent with their claim for security, and the alleged contractual fetter on production was inexplicably not raised until the hearing. Further, it was only on the basis of material filed by Arakis after the hearing at my request that the existence of a lawful excuse finally became apparent. This unhelpful approach has clearly inconvenienced Meda Pharma as well as the Commissioner who is charged with the orderly conduct of proceedings brought before her. In these circumstances I consider Arakis should have costs awarded against them.
Accordingly, I award costs under schedule 8 against Arakis.
G A Jenkins
Delegate of the Commissioner of Patents
16 December 2008
Patent attorneys for the applicant: Phillips Ormonde & Fitzpatrick, Melbourne
Patent attorneys for the opponent: F B Rice & Co, Melbourne