Commonwealth of Australia v Sanofi
[2024] HCA 47
•11 December 2024
HIGH COURT OF AUSTRALIA
GORDON A-CJ,
EDELMAN, STEWARD, JAGOT AND BEECH‑JONES JJ
COMMONWEALTH OF AUSTRALIA APPELLANT
AND
SANOFI (FORMERLY SANOFI-AVENTIS) & ORS RESPONDENTS
Commonwealth of Australia v Sanofi
[2024] HCA 47
Date of Hearing: 4 & 5 September 2024
Date of Judgment: 11 December 2024S169/2023
ORDER
Appeal dismissed with costs.
On appeal from the Federal Court of Australia
Representation
J T Gleeson SC and F T Roughley SC with G Watson Keesing and M F Caristo for the appellant (instructed by Corrs Chambers Westgarth)
J C Sheahan KC with J J Hutton SC, S Fitzpatrick and B K Lim for the respondents (instructed by Jones Day)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Commonwealth of Australia v Sanofi
Damages – Undertaking as to damages – Where interlocutory injunction obtained to prevent manufacture or sale of generic pharmaceutical products – Where compensation sought for loss suffered as result of generic products not being listed on Pharmaceutical Benefits Scheme ("PBS") – Whether generic products would have been listed on PBS but for interlocutory injunction – Counter-factual approach – Whether onus of proof discharged.
Appeals – Standard of review – Ultimate appellate court – Where concurrent factual findings of lower courts – Whether special or exceptional circumstances – Whether plain injustice or clear error – Whether concurrent findings not clearly wrong – Whether concurrent findings open and compelling.
Onus of proof – Shifting evidential onus – Whether rigid legal rule applied for proof of loss arising from undertaking as to damages.
Words and phrases – "clear error", "concurrent findings", "counter-factual", "evidential onus", "interlocutory injunction", "onus of proof", "plain injustice", "special or exceptional circumstances", "standard of review", "ultimate appellate court", "undertaking as to damages".
National Health Act 1953 (Cth), ss 99ACB, 99ACH.
GORDON A-CJ, EDELMAN AND STEWARD JJ.
Introduction
The important point of law in this appeal is to reaffirm the limited circumstances in which this Court should review findings of fact made by a primary judge, which were not disturbed by the intermediate appellate court. The principled approach taken by this Court, reaffirmed in these reasons, is common to many ultimate appellate courts in the common law tradition. That principle is that, absent special or exceptional circumstances such as plain injustice or clear error, this Court will not engage in a detailed review of concurrent factual findings of lower courts. This approach applies a fortiori to concurrent findings of facts and counter-facts that are made as steps towards an ultimate finding of facts. The principle is a pragmatic one based upon an important need for triage. For every appeal that is heard by an ultimate appellate court, with a limited capacity to hear appeals, another appeal (or, as in this case, sometimes more) will not be heard.
This appeal does not concern any individual rights, nor expose any plain injustice or clear error.
The first respondent, which collectively with the other respondents may be described as "Sanofi", held a patent in a number of jurisdictions including Australia in respect of the drug clopidogrel which is usually prescribed to patients who have suffered, or are at risk of suffering, a heart attack or stroke. Sanofi earned annual worldwide revenue from sales of clopidogrel equivalent to more than $1 billion. Clopidogrel had been supplied by Sanofi in Australia in tablet form since 1998 and it was first listed on the Pharmaceutical Benefits Scheme ("PBS") on 1 November 1999.
The Apotex group of companies was at all material times a substantial manufacturer and distributor of generic medicines worldwide. It developed a generic clopidogrel product which it sought to bring to market in Australia. On 25 September 2007, Sanofi gave the usual undertaking as to damages in support of an interlocutory injunction granted by Gyles J of the Federal Court of Australia that prevented Apotex Pty Ltd ("Apotex" or "Apotex Australia") from competing with Sanofi by manufacture and sale of a generic competitor to Sanofi's patented drug, clopidogrel. That interlocutory order recorded that Apotex undertook not to take steps to obtain PBS listing of its clopidogrel products.
The Federal Court of Australia granted Sanofi a final injunction restraining Apotex on 19 August 2008. That final injunction was set aside by the Full Court of the Federal Court in accordance with reasons given on 29 September 2009. The Full Court made orders to that effect on 13 October 2009, allowing Apotex's appeal and ordering that Sanofi's patent be revoked. Sanofi's application for special leave to appeal was refused by this Court on 12 March 2010.
The appellant, the Commonwealth of Australia ("the Commonwealth"), then sought compensation from Sanofi on the undertaking as to damages for loss it says it suffered as a result of Apotex being prevented from supplying clopidogrel generic pharmaceutical products and obtaining PBS listing for those products. The Commonwealth claimed that without the interlocutory injunction (supported by the undertaking as to damages) Apotex would have obtained listing of its clopidogrel products on the PBS on 1 April 2008.
The Commonwealth alleged that Sanofi's conduct in seeking and obtaining the interlocutory injunction prevented reduction in prices for clopidogrel products that would have arisen from Apotex's PBS listing of those products on 1 April 2008 and which consequently led the Commonwealth to suffer approximately $325 million in losses (excluding interest and costs). But based on findings of the primary judge in the Federal Court of Australia, which were not disturbed by the Full Court of the Federal Court of Australia ("the Full Court"), and were not in issue in this Court, around $314 million of the Commonwealth's asserted loss of $325 million was found not to be within the scope of the undertaking as to damages. Specifically, other than in respect of around $11 million of the alleged losses, the interlocutory injunction and the undertaking given in support of it were "totally eclipsed"[1] by the grant of the final injunction.
[1]Fenris Consulting Ltd v Ennismore Fund Management Ltd [2022] 2 CILR 1 at 21 [50] (Privy Council), quoting Ennismore Fund Management Ltd v Fenris Consulting Ltd [2020] 2 CILR 147 at 191 [110].
After a trial that ran for 17 days, the primary judge concluded that the Commonwealth had not discharged its onus, and was "not persuaded that Apotex ... would have sought and obtained a PBS listing of its clopidogrel products from 1 April 2008 even if the interlocutory injunction had not been granted".[2] This was particularly so due to the combined effect of two important events which occurred shortly before the interlocutory injunction was granted. The second event, in combination with the first, had the potential to transform radically any calculus as to Apotex's future action. No evidence about the effect of these two events on Apotex was called from the central person in the Commonwealth's "camp",[3] Dr Bernard (known as "Barry") Sherman. Dr Sherman was the co-founder of Apotex Inc ("Apotex Canada"), its Chief Executive Officer and Chairman, the "ultimate controller"[4] of the Apotex group (including Apotex Australia), and the person who would make the ultimate decision about listing on the PBS.[5] The ultimate conclusion of the primary judge, as well as his Honour's reasoning, was unanimously affirmed by the Full Court after a wide-ranging appeal over seven days. That analysis was not clearly wrong and was not productive of injustice.
[2]TheCommonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 309 [351].
[3]The Commonwealth v Sanofi (formerly Sanofi-Aventis) (2023) 411 ALR 315 at 393 [358].
[4]TheCommonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 281 [199].
[5]TheCommonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 307 [339].
One submission made by the Commonwealth before the Full Court, which was heavily relied upon in this Court, was that at the hearing of the interlocutory injunction, but prior to the second event, senior counsel for Apotex had told the Court that Apotex intended to apply for PBS listing if there was no interlocutory injunction granted. An undertaking as to damages was offered by Apotex. The Commonwealth, quite properly, did not make a submission that such a statement by senior counsel could somehow create an estoppel precluding Apotex from arguing that Dr Sherman might subsequently have decided not to apply for PBS listing despite the second event. Indeed, the Commonwealth conceded that subsequent events (such as a factory burning down) might have led Dr Sherman not to make that application. Even assuming that senior counsel's instructions on this point had been given by Dr Sherman, Dr Sherman's approach to PBS listing after the second event would have depended upon the strength of Dr Sherman's prior intention to apply for PBS listing. But Dr Sherman was not called by the Commonwealth. And nothing about the strength of any intention of Dr Sherman could be inferred from Apotex's offer of an undertaking as to damages. If no interlocutory injunction had been granted but Apotex subsequently decided not to seek PBS listing and undertook not to do so, Sanofi would have consented to orders permitting withdrawal of the undertaking in a heartbeat.
Since it was common ground that Dr Sherman's intention to apply for PBS listing was not absolute or fixed, this Court was invited to engage in a minute analysis of the evidence at trial in order to ascertain the nature of Dr Sherman's intention in the counter-factual scenario that the injunction had not been granted. The central question on this appeal is whether this Court should overturn many concurrent and unanimous findings of fact in the courts below in circumstances where: (i) the consequences for the Commonwealth that follow from those findings are insignificant to it; (ii) the Commonwealth's grounds of appeal in this Court, specifically the broadly expressed second ground of appeal, cannot be read as a rolled up ground of appeal that effectively invites this Court to run a new trial and to revisit all of the particular grounds of appeal before the Full Court which raised no point of general public importance; (iii) the record before this Court of the proceedings in the courts below is incomplete and involves only a selection of evidence, transcripts and submissions; (iv) the findings of the primary judge and the Full Court were open and are not clearly wrong; and (v) it is not open to the Commonwealth on a third hearing of the issues to revisit findings of fact.
The answer to the central question is, emphatically, "no".
Issues and non-issues: the scope of the appeal
There were two grounds of appeal in this Court. Those grounds identified the issues in this appeal. The scope of the appeal is governed by the grounds of appeal. At no point did the Commonwealth seek to amend or enlarge its grounds of appeal in this Court.
(1) First ground of appeal – question of law
The first ground of appeal in this Court was principally a question of law. That legal issue, as raised in the special leave application, concerned the onus of proof in a claim made on an undertaking as to damages. The first ground alleged that the Full Court erred in failing to hold: (i) that the Commonwealth's evidential burden was to establish a prima facie case that its loss flowed directly from the interlocutory injunction; and (ii) that, once that was established, an evidential burden shifted to Sanofi to establish that Apotex would not have sought listing on the PBS even if not enjoined (ground 1(a)). The second, and subsidiary, ground of appeal concerned the application to findings of fact of the proper approach to the question of onus. The Commonwealth submitted that it had discharged its evidential burden but Sanofi did not (ground 1(b)).
If the Commonwealth failed on ground 1(a), ground 1(b) was not reached. At one point in oral submissions, the Commonwealth all but abandoned ground 1(a). The Commonwealth properly accepted that adoption of a methodological approach based upon a shifting evidential onus, in the sense of a burden of adducing evidence,[6] was not required in every case and that the proposed shifting evidential onus, after a prima facie case was established, was merely a way of undertaking a rigorous counter-factual analysis. That was correct. The Commonwealth's proposed shifting evidential onus, as articulated in ground 1(a), is inconsistent with the approach of this Court in European Bank Ltd v Evans,[7] that the methodology of assessment of compensation on an undertaking as to damages "cannot be constrained by a rigid formulation". An evidential onus might shift to a defendant in circumstances where the defendant's wrongdoing has made proof of loss difficult or impossible[8] or where adducing particular evidence is peculiarly within the power of the defendant.[9] But these are flexible principles of civil proof which did not arise in the circumstances of this case. Those principles do not justify a rigid legal rule that a party asserting that it has suffered loss arising from an undertaking as to damages must prove only a prima facie case of loss.
[6]Williams, "Burdens and Standards in Civil Litigation" (2003) 25 Sydney Law Review 165 at 168.
[7](2010) 240 CLR 432 at 439 [17].
[8]Armory v Delamirie (1722) 1 Strange 505 [93 ER 664]; Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 at 59; Cessnock City Council v 123 259 932 Pty Ltd (2024) 98 ALJR 719 at 747 [129]; 418 ALR 304 at 338.
[9]Blatch v Archer (1774) 1 Cowper 63 at 65 [98 ER 969 at 970]; Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at 454 [36].
Further, properly understood, none of the reasons for decision in this Court in Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd[10] support the Commonwealth's proposed shifting onus. In that case, Air Express sought an inquiry as to damages arising from an undertaking as to damages and compensation for losses suffered from the interlocutory injunction that the undertaking had supported. The interlocutory injunction prevented Air Express from being granted permission to import aircraft into Australia. Whilst it may be that a plaintiff who claims compensation under an undertaking as to damages need only show a prima facie case to obtain an inquiry as to damages,[11] the primary judge (Aickin J) and the majority of the Full Court (Barwick CJ, Gibbs and Stephen JJ) held that Air Express was not entitled to compensation because it had not proved that but for the interlocutory injunction it would have obtained the permission and imported the aircraft.[12] A prima facie case, or proof of only the possibility of loss, was insufficient; although the absence of a prima facie case would plainly prevent even an inquiry as to damages. As Gibbs J said, rejecting a submission that there is a shifting onus: the party "who seeks to enforce the undertaking, must prove that the damage he has sustained was caused by the making of the order".[13]
[10](1981) 146 CLR 249. See also Fenris Consulting Ltd v Ennismore Fund Management Ltd [2022] 2 CILR 1 at 26 [67] (Privy Council).
[11]Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 at 254, 268.
[12]Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 at 306, 309-310, 313-315, 317-318, 320.
[13]Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 at 313.
In this case, therefore, the Commonwealth bore the legal and evidentiary onus of proof in relation to causation of loss within the scope of the undertaking as to damages while the interlocutory injunction persisted in the period between 25 September 2007 and 19 August 2008. The Commonwealth was required to establish on the balance of probabilities that Apotex would have sought and obtained PBS listing but for the interlocutory injunction. To the extent that ground 1(a) was not abandoned, it must be dismissed and, as a result, ground 1(b) is not reached.
(2) Second ground of appeal – failure to find, by inference from the evidence, in the absence of the interlocutory injunction, that Dr Sherman would have reconfirmed the plan for Apotex to seek PBS listing
The only other ground of appeal in this Court was that the Full Court erred in failing to find, by inference from the evidence, that in the absence of the interlocutory injunction, it was likely that Dr Sherman would have reconfirmed the plan for Apotex to seek PBS listing.
On its face, the second ground of appeal may appear to be an open-ended invitation for this Court to conduct a new trial, albeit without any new evidence, of the central issue that had been decided unanimously by the primary judge and the Full Court against the Commonwealth. That approach to the second ground of appeal was not how it was initially conceived by the Commonwealth. In seeking special leave to appeal, the proposed second ground of appeal was framed as a mixed question of law and fact with the second ground as a confined application of the first ground. And on this appeal, the Commonwealth's written submissions in support of the second ground comprised less than two pages in total. The submissions were properly and understandably short because the second ground of appeal had been conceived as dependent upon acceptance of the first. The Commonwealth's written submissions had one sentence which read "[t]he evidence showed that Dr Sherman's decision to launch clopidogrel at risk in Australia was not 'provisional' on 27 June 2007 or at any time before the interlocutory hearing". In support of that sentence, the Commonwealth referred to and relied upon earlier paragraphs in its written submissions which, in turn, referred to other documents and the cross-examination of Mr Millichamp, the Managing Director of Apotex Australia at all relevant times.
The submissions for the Commonwealth were meticulously and powerfully presented but must be rejected. First, as will be explained, it is contrary to principle to undertake such an inquiry, or challenge concurrent findings of fact, where the appeal does not concern any individual rights, nor expose any plain injustice and the findings of both courts below were open and not clearly wrong. Second, the Commonwealth's oral submissions and its case as properly framed in its special leave application and written appeal submissions in this Court, were inconsistent with such an inquiry.
Two matters should be emphasised at the outset. First, the Commonwealth's appeal to the Full Court against the fact finding of the primary judge was not simply dismissed. The findings of fact of the primary judge were relevantly confirmed by the unanimous Full Court. And, second, neither of the Commonwealth's grounds of appeal in this Court suggested, let alone asserted, that the Full Court had erred in concluding that the primary judge had addressed, or adequately addressed, one or more of the Commonwealth's submissions at trial or that the Full Court had failed to address one or more of the Commonwealth's submissions on appeal. Nor, unlike the grounds of appeal in the Full Court, did the second ground of appeal in this Court expressly challenge the finding that the Commonwealth had not established that Apotex would have sought and obtained a PBS listing of its clopidogrel products from 1 April 2008 if the interlocutory injunction had not been granted.
The second ground of appeal in this Court was an omnibus ground of appeal absent any particularisation. It stood in stark contrast to ground 2 of the notice of appeal filed in the Full Court – that the primary judge erred in concluding that the Commonwealth had not established that Apotex would have sought and obtained a PBS listing of its clopidogrel products from 1 April 2008 if the interlocutory injunction had not been granted. Ground 2 in the Full Court contained detailed particulars. Particular (a) was directed to the contention (rerun in this Court) that the primary judge erred in failing to hold that the Commonwealth's onus was to establish a prima facie case that its damage flowed directly from the grant of the interlocutory injunction and in failing to find that the Commonwealth had discharged that onus. That was the subject of ground 1 in this court and has been addressed above.[14] Particulars (c) and (d) were not repeated in the grounds of appeal before this Court. Particular (c) alleged that the primary judge erred in concluding that the Commonwealth's case suffered an evidentiary deficiency due to the failure to call Dr Sherman and in failing to address the Commonwealth's submissions "in relation thereto". Particular (d) alleged that the "extreme delay" by the primary judge in delivering judgment allows an appellate court more readily to conclude that arguments and evidence not addressed by the primary judge were overlooked and to more readily establish that the other errors alleged by the Commonwealth could be made out.
[14]See [13]-[16] above.
That leaves particulars (b) and (e). Particular (b) in substance, alleged that the primary judge erred by: (i) failing to have regard, when making findings of credit in ten specific paragraphs of his Honour's reasons, and when "speculating" as to what Apotex might have done had the interlocutory injunction not been granted in 36 specific paragraphs of his Honour's reasons, to "relevant, contemporaneous evidence of Apotex's intention to commence selling clopidogrel products and to apply for a PBS listing if no interlocutory injunction was granted" and to "relevant evidence from witnesses called by the Commonwealth"; and (ii) failing to address, either adequately or at all, submissions of the Commonwealth "in relation thereto". The Full Court addressed each aspect of this particular. Particular (e) was expressed in broader terms, alleging that the primary judge ought to have made positive findings "that, if the interlocutory injunction had not been granted, Apotex would in 2007 have launched and sought listing of its clopidogrel products on the PBS, and would have obtained a PBS listing of its clopidogrel products with effect from 1 April 2008". The Full Court held that this particular did not arise where the Full Court did "not detect[] any error in the trial judge's approach to the issues otherwise raised in Ground 2".[15]
[15]The Commonwealth v Sanofi (formerly Sanofi-Aventis) (2023) 411 ALR 315 at 400 [389].
In stark contrast, in this Court, no particulars of the omnibus second ground of appeal were provided by the Commonwealth.
The position then is this. There are concurrent findings of fact by the primary judge and the Full Court. In this appeal, the Commonwealth, by its oral submissions, seeks for this Court to review and evaluate a vast body of evidence, much of which is in conflict, where the findings of fact and counter-fact of the primary judge have been relevantly confirmed by a unanimous Full Court.[16] It is therefore necessary, at the outset, to address the applicable standard of review by an ultimate appellate court. And as will be explained, this appeal did not meet that standard ‑ it does not concern any individual rights, any injustice and the findings are not clearly wrong. Any assessment of the Commonwealth's collateral attack upon the concurrent findings of fact in the courts below would have required a far more complete copy before this Court of the record (of evidence, transcript and submissions) showing how the Commonwealth ran its case in the courts below. That material was not before this Court because the Commonwealth had, properly, attempted to confine the scope of factual dispute on this appeal.[17] In any event, even on the material before this Court, it is not open, based on the Commonwealth's notice of appeal to this Court and the notice of appeal to the Full Court, for a new case to be developed involving a third set of findings of facts and counter-facts.
[16]South Australia v Johnson (1982) 42 ALR 161 at 167.
[17]See [49] below.
Appellate review of facts
It is a well-established principle that an ultimate appellate court — a second appellate court — "should not, in the absence of special reasons such as plain injustice or clear error"[18] (also referred to as "special circumstances"[19] or "compelling circumstances"[20]), disturb concurrent findings of fact.[21] That principle is "long standing". Its importance has not diminished, but rather increased, "in the circumstances of modern litigation".[22]
[18]Louth v Diprose (1992) 175 CLR 621 at 634 (emphasis added).
[19]Waltons Stores(Interstate) Ltd v Maher (1988) 164 CLR 387 at 434-435.
[20]New South Wales v Fahy (2007) 232 CLR 486 at 534 [153].
[21]The Commonwealth v Introvigne (1982) 150 CLR 258 at 274; see also at 262; South Australia v Johnson (1982) 42 ALR 161 at 167; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 434-435; Louth v Diprose (1992) 175 CLR 621 at 634; Bridgewater v Leahy (1998) 194 CLR 457 at 471 [43]; Kozarov v Victoria (2022) 273 CLR 115 at 134 [49].
[22]Roads and Traffic Authority of New South Wales v Dederer (2007) 234 CLR 330 at 334 [5].
That principle reflects, and is rooted in, the nature of an appeal to this Court. An appeal to an intermediate court of appeal is, typically, an appeal by way of rehearing.[23] Under s 73 of the Constitution, an appeal to this Court is different; it is a "strict" appeal concerned with error.[24] In the appeal before this Court, the "strict" appeal is brought after the appellant has had a trial of the issues of fact and law following which the primary judge made findings of fact, and then after that, the appellant has had an appeal to the intermediate court of appeal, by way of rehearing, where the intermediate court made substantially the same relevant findings of fact as the primary judge made. As Gleeson CJ said in Roads and Traffic Authority of New South Wales v Dederer,[25] "[i]n an appeal of this nature, the function of this Court, as a second appellate court and a court of final resort, is not simply to give a well-resourced litigant a third opportunity to persuade a tribunal to take a view of the facts favourable to that litigant".
[23]See, eg, Federal Court of Australia Act 1976 (Cth), ss 27, 30AI; Supreme Court Act 1933 (ACT), s 37N; Supreme Court Act 1970 (NSW), s 44; Supreme Court Act 1979 (NT), s 51; Supreme Court of Queensland Act 1991 (Qld), s 29(3); Uniform Civil Procedure Rules 1999 (Qld), r 765(1); Supreme Court Act 1935 (SA), s 19D; Criminal Code Act 1924 (Tas), s 409; Supreme Court Civil Procedure Act 1932 (Tas), s 46; Supreme Court Act 1986 (Vic), s 10(3); Criminal Appeals Act 2004 (WA), s 40; Supreme Court Rules 1971 (WA), O 65, r 8.
[24]See, eg, Mickelberg v The Queen (1989) 167 CLR 259 at 267; Roads and Traffic Authority of New South Wales v Dederer (2007) 234 CLR 330 at 378-379 [164].
[25](2007) 234 CLR 330 at 334 [5].
Concurrent findings may exist at different levels of particularity — with or without an element of normative judgment.[26] This appeal is concerned with concurrent findings of fact that involved no value judgment. In the application of the "clear error" principle, it is immaterial that the concurrent findings of fact were of primary fact or involved conclusions and inferences drawn from primary facts.[27]
[26]Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 567 [50]. cf Bridgewater v Leahy (1998) 194 CLR 457 at 489-493 [112]-[122] and Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 434-435.
[27]Louth v Diprose (1992) 175 CLR 621 at 634.
In challenging concurrent findings of fact in this Court, an appellant confronts a high bar — a difficult task.[28] The appellant carries the burden of establishing "special reasons such as plain injustice or clear error".[29] The high bar is implicit in the requirement that there be plain injustice or clear error, not merely error.[30] If the findings of fact made in the courts below appear to be correct, the high bar is not cleared and the appellant will not have discharged its burden.[31] The point that the ultimate appellate court must reach is that it holds a "clear conviction"[32] that the findings made at trial and confirmed by the intermediate appellate court, understood in light of the arguments put by the parties at trial and on appeal, are clearly wrong.[33] It is not enough that an ultimate appellate court would simply reach a different conclusion of its own.[34] It is irrelevant if there were differences in the reasoning of the primary judge and the intermediate appellate court, or if there was a dissentient in the intermediate appellate court.[35] By contrast, where the errors made in the courts below lay in fundamental errors of law, then concurrent findings of fact are no insulation.[36]
[28]Baffsky v Brewis (1977) 51 ALJR 170 at 172; 12 ALR 435 at 438: "where there have been concurrent findings of fact or concurrent views as to the exercise of a discretion, an appellant has in this Court at least a difficult task in persuading it that nonetheless it ought to set aside such findings or that exercise of discretion" but this Court is "in a proper case able to depart from them".
[29]Louth v Diprose (1992) 175 CLR 621 at 634.
[30]cf MW v Director-General, Department of Community Services (2008) 82 ALJR 629 at 660-661 [184]; 224 ALR 205 at 246.
[31]Bridgewaterv Leahy (1998) 194 CLR 457 at 471 [43], 472 [47].
[32]Major v Bretherton (1928) 41 CLR 62 at 70-71, cited by The Commonwealth v Introvigne (1982) 150 CLR 258 at 274 and Roads and Traffic Authority of New South Wales v Dederer (2007) 234 CLR 330 at 335 [7]. See also Bridgewater v Leahy (1998) 194 CLR 457 at 472 [47].
[33]Roads and Traffic Authority of New South Wales v Dederer (2007) 234 CLR 330 at 334-335 [6], citing Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 568-569 [53]-[54], which, in turn, quoted Owners of the "P Caland" and Freight v Glamorgan Steamship Co [1893] AC 207 at 216.
[34]MW v Director-General, Department of Community Services (2008) 82 ALJR 629 at 660-661 [184]; 224 ALR 205 at 246, citing Eastman v The Queen (2000) 203 CLR 1 at 13 [18], 24 [68], 54 [164], 63 [190] and Mickelberg v The Queen (1989) 167 CLR 259.
[35]Louth v Diprose (1992) 175 CLR 621 at 634; Bridgewater v Leahy (1998) 194 CLR 457 at 471 [43]; Graham Barclay OystersPty Ltd v Ryan (2002) 211 CLR 540 at 568 [52].
[36]Roads and Traffic Authority of New South Wales v Dederer (2007) 234 CLR 330 at 344 [42]. See also Fingleton v The Queen (2005) 227 CLR 166.
Nothing is gained by parsing and analysing the phrases "plain injustice" or "clear error". Both are expressed in emphatic terms. In many cases clear error will bespeak plain injustice. In other cases, the subject matter of the issues at trial, or the findings made, may permit close attention to whether error has been demonstrated. Such cases may include ones concerning liberty,[37] bodily integrity,[38] reputation[39] or potential financial ruin.[40] What is to be emphasised is that the cases in which this Court overturns concurrent findings of fact will be rare. And the Court will not overturn concurrent findings of fact unless the appellant establishes that both the primary judge and the intermediate court of appeal were clearly wrong to make the findings that they did. This is not such a case.
[37]See, eg, Fennell v The Queen (2019) 93 ALJR 1219; 373 ALR 433; Pell v The Queen (2020) 268 CLR 123; Bromley v The King (2023) 98 ALJR 84; 416 ALR 570.
[38]The Commonwealth v Introvigne (1982) 150 CLR 258 at 262; Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at 502-503 [136]-[141].
[39]Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345.
[40]Bahr v Nicolay [No 2] (1988) 164 CLR 604 at 623. See also Baffsky v Brewis (1976) 51 ALJR 170 at 172; 12 ALR 435 at 437-438.
Many decisions of this Court have explained why there is a sense of "trepidation" about interfering in concurrent findings of fact of a primary judge and an intermediate appellate court[41] and why it is not the function of this Court, a final appellate court, to perform the tasks of fact finding and factual review. The task of this Court, an ultimate appellate court, is not to undertake an inquiry into a long-concluded trial or to seek to resurrect it. An appeal to this Court is not an appeal by way of rehearing, still less a trial or retrial,[42] but a strict "appeal" concerned with error.
[41]Roads and Traffic Authority of New South Wales v Dederer (2007) 234 CLR 330 at 378 [164]; cf 410-411 [287]. See also Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 274 [58]; Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 634 [262]; Aktiebolaget Hassle v Alphapharm Pty Ltd (2002) 212 CLR 411 at 447-448 [95]; Nominal Defendant v GLG Australia Pty Ltd (2006) 228 CLR 529 at 552 [74]; New South Wales v Fahy (2007) 232 CLR 486 at 534 [153].
[42]Mickelberg v The Queen (1989) 167 CLR 259 at 267; Roads and Traffic Authority of New South Wales v Dederer (2007) 234 CLR 330 at 378-379 [164].
But that is not all. The law values finality, a basic principle of our legal system.[43] Appellate restraint in relation to review of fact finding promotes finality.[44] Rights of appeal qualify the application of the principle of finality but, absent the potential for injustice, that qualification is not expanded to challenges to concurrent findings of fact unless clear error is shown without the need for minute examination of the facts.
[43]See, eg, Wollongong University v Metwally [No 2] (1985) 59 ALJR 481 at 483; 60 ALR 68 at 71; Coulton v Holcombe (1986) 162 CLR 1 at 8-9; Liftronic Pty Ltd v Unver (2001) 75 ALJR 867 at 875 [44]; 179 ALR 321 at 331; D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at 17 [34]; 20-21 [45]-[46].
[44]Roads and Traffic Authority of New South Wales v Dederer (2007) 234 CLR 330 at 336-337 [12].
These foundational principles are sufficient to support the principle of restraint exercised by this Court, as a final appellate court, in its focus upon injustice and clear error. In other words, contrary to submissions that were made orally on this appeal, the rule does not depend on the capacity for this Court to revisit findings of fact, such as in circumstances where the case is primarily documentary and issues of demeanour are subsidiary. Nevertheless, even in those cases, there are further reasons that support the principle.
The exercise of appellate caution in reversing findings of fact, let alone concurrent findings of fact, is more than "professional courtesy".[45] The need for caution recognises, as Lord Hoffmann once observed, that "specific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon [them] by the primary evidence".[46] The "expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance ... of which time and language do not permit exact expression, but which may play an important part in the judge's overall evaluation".[47] That is unsurprising. In civil cases, a court finds that a disputed event occurred if the occurrence of the event is more probable than not. But fact finding is not a science and, in resolving conflicting evidence, there is often scope for legitimate differences of view about what facts have been proved. These observations about the principle of finality and appellate restraint in an ultimate appellate court are "not inconsistent with doing justice to the parties". Justice has "more than one dimension".[48] Reformulation of the facts on an appeal can lead to an inherently unfair situation — a factual decision by an ultimate appellate court cannot be further appealed if errors of fact or inference are revealed in the reasons of that court.[49]
[45]Biogen Inc v Medeva plc [1997] 1 RPC 1 at 45.
[46]Biogen Inc v Medeva plc [1997] 1 RPC 1 at 45.
[47]BiogenInc v Medeva plc [1997] 1 RPC 1 at 45 (emphasis added).
[48]Bell, "Appellate review of the facts" (2014) 39 Australian Bar Review 132 at 136-138, 145.
[49]See, eg, Rae v International Insurance Brokers (Nelson Marlborough) Ltd [1998] 3 NZLR 190 at 199.
The well-established principle is also consistent with the criteria for granting special leave to appeal to this Court.[50] Concurrent findings of fact that are plainly wrong may justify the grant of special leave having regard to the interests of justice in the particular case. But the less apparent the error, and the less the potential for injustice, the less likely it will be that the interests of justice will favour a grant of special leave. The special leave process will generally operate as the mechanism by which this Court ensures that it is only tasked with reconsidering concurrent factual findings where there are special reasons, such as plain injustice. However, as this case shows, where an appellant departs from the case presented in its special leave application, the Court may be in the position of having to consider whether there is "clear error" sufficient to justify disturbing concurrent findings of fact.
[50]Judiciary Act 1903 (Cth), s 35A.
These matters, taken together with questions about the deployment of the time required by a final court to undertake such a review, combine to reinforce the well-established principle that an ultimate appellate court — a second appellate court — should not in the absence of "special reasons", such as plain injustice or clear error, disturb concurrent findings of fact.
This is no uniquely Australian view.
In Canada, the standard for intervention has been set out and reaffirmed in an unbroken line of cases for decades.[51] As the "second level of appeal",[52] the Supreme Court of Canada adopts a "principle of non‑intervention"; the "Court's role is not to reassess the findings of fact of a judge at the trial level that an appellate court has not questioned", a principle "all the stronger in the face of concurrent findings of both courts below"[53] unless there is a "palpable and overriding error in the ... analysis of the facts".[54] "Palpable and overriding error", although used as "an elegant and expressive description of the entrenched and generally applicable standard of appellate review of the findings of fact at trial",[55] does not displace alternative formulations of the governing standard of "clearly wrong",[56] "absolutely wrong"[57] or "clearly wrong or erroneous".[58] Reflecting the principle of non‑intervention, the Court will not reverse concurrent findings "even though the evidence on which the courts below based their findings of fact might appear weak".[59]
[51]HL v Canada (Attorney General) [2005] 1 SCR 401 at 424-427 [62]-[76] and the authorities cited. See also Quebec (Director of Criminal and Penal Prosecutions) v Jodoin [2017] 1 SCR 478 at 501 [51].
[52]Quebec (Director of Criminal and Penal Prosecutions) v Jodoin [2017] 1 SCR 478 at 501 [51].
[53]Quebec (Director of Criminal and Penal Prosecutions) v Jodoin [2017] 1 SCR 478 at 501 [51] (emphasis added), quoting St‑Jean v Mercier [2002] 1 SCR 491 at 509 [45], which, in turn, quotes Ontario (Attorney General) v Bear Island Foundation [1991] 2 SCR 570 at 574.
[54]Quebec (Director of Criminal and Penal Prosecutions) v Jodoin [2017] 1 SCR 478 at 501 [51] (emphasis added); HL v Canada (Attorney General) [2005] 1 SCR 401 at 410 [4].
[55]HL v Canada (Attorney General) [2005] 1 SCR 401 at 421 [55]. The reference to the "generally applicable standard of appellate review" reflects the fact that in Canada the non-intervention principle applies to intermediate appellate courts: Quebec (Director of Criminal and Penal Prosecutions) v Jodoin [2017] 1 SCR 478 at 501 [51].
[56]See, eg, HL v Canada (Attorney General) [2005] 1 SCR 401 at 421 [55], quoting Housen v Nikolaisen [2002] 2 SCR 235 at 253 [22], 296 [103].
[57]Trans-Canada Shoe Ltd v Travelers Indemnity Co [1976] 2 SCR 46 at 53-54 and the authorities cited.
[58]Trans-Canada Shoe Ltd v Travelers Indemnity Co [1976] 2 SCR 46 at 53-54, quoting Sénésac v The Central Vermont Railway Co (1896) 26 SCR 641 at 646.
[59]Trans-Canada Shoe Ltd v Travelers Indemnity Co [1976] 2 SCR 46 at 54, citing George Matthews Co v Bouchard (1898) 28 SCR 580.
In the United States, where judicial review of findings of trial courts does not have the statutory or constitutional limitations on judicial review of findings by administrative agencies or by a jury, from at least the 1940s the Supreme Court of the United States has adopted what has been described as the "heavy burden under the 'two-court rule'":[60] "[a] court of law, such as this Court is, rather than a court for correction of errors in fact finding, cannot undertake to review concurrent findings of fact by two courts below in the absence of a very obvious and exceptional showing of error".[61] The Court must be "left with the definite and firm conviction that a mistake has been committed".[62] In Goodman v Lukens Steel Co,[63] the Court indicated it was "not inclined to examine the record for ourselves absent some extraordinary reason for undertaking this task" where the appellant provides no compelling reason for the Court to do so. In persuading the Court to exercise its jurisdiction to review concurrent findings of fact, the appellant's burden has been described as "heavy".[64] A finding is not "clearly erroneous" if there is evidence to support it.[65] In its modern application, the Court has been more interventionist where the decision for review concerns denaturalization[66] or where a person's citizenship[67] or liberty is at stake.[68] This can be contrasted with the Court's reasoning in The Conqueror,[69] where it held that the large sum of money involved did not justify the Court's reconsideration of concurrent findings of fact.
[60]United States v Reliable Transfer Co (1975) 421 US 397 at 401, citing Graver Tank & Manufacturing Co v Linde Air Products Co (1949) 336 US 271 at 275. See also District of Columbia v Pace (1944) 320 US 698 at 702; Stern, "Review of Findings of Administrators, Judges and Juries: A Comparative Analysis" (1944) 58 Harvard Law Review 70 at 89.
[61]Exxon Co, USA v Sofec, Inc (1996) 517 US 830 at 841 (emphasis added), quoting Graver Tank & Manufacturing Co v Linde Air Products Co (1949) 336 US 271. See also Berenyi v District Director, Immigration and Naturalization Service (1966) 385 US 630 at 635; Goodman v Lukens Steel Co (1987) 482 US 656 at 665; Flowers v Mississippi (2019) 139 S Ct 2228 at 2266.
[62]See, eg, United States v United States Gypsum Co (1948) 333 US 364 at 395.
[63](1987) 482 US 656 at 665.
[64]United States v Reliable Transfer Co (1975) 421 US 397 at 401.
[65]See, eg, Williams Manufacturing Co v United Shoe Machinery Corp (1911) 316 US 364 at 367. In relation to the Federal Rules of Civil Procedure, r 52(a)(6), see Anderson v Bessemer City (1985) 470 US 564 at 573-575; Teva Pharmaceuticals USA, Inc v Sandoz, Inc (2015) 574 US 318 at 324; Cooper v Harris (2017) 137 S Ct 1455 at 1465; Alexander v South Carolina State Conference of the NAACP (2024) 144 S Ct 1221 at 1270-1271.
[66]See, eg, Baumgartner v United States (1944) 322 US 665 at 670.
[67]See, eg, Nowak v United States (1958) 356 US 660 at 663; Fedorenko v United States (1981) 449 US 490 at 505.
[68]See, eg, Chaunt v United States (1960) 364 US 350 at 353; Costello v United States (1961) 365 US 265 at 269-270.
[69](1897) 166 US 110 at 136.
In the United Kingdom, "only in comparatively rare cases" will the Supreme Court of the United Kingdom interfere with concurrent findings of fact by lower courts[70] and then, "only where it can be shown that both courts were clearly wrong".[71] In the United Kingdom, a range of adverbs have been used – "clearly", "plainly", "blatantly", "palpably" wrong.[72]
[70]Montgomery v Lanarkshire Health Board (General Medical Council intervening) [2015] AC 1430 at 1465 [97]. The position in the Privy Council is similar, if not stricter: see, eg, Srimati Bibhabati Devi v Kumar Ramendra Narayan Roy [1946] AC 508 at 521 (Privy Council); Central Bank of Ecuador v Conticorp SA [2016] 2 LRC 46 at 54-57 [4]-[8] (Privy Council).
[71]Montgomery v Lanarkshire Health Board (General Medical Council intervening) [2015] AC 1430 at 1465 [97], quoting Higgins v J & C M Smith (Whiteinch) Ltd (1990) SC (HL) 63 at 82 (emphasis added). See also Hicks v Chief Constable of the South Yorkshire Police [1992] 2 All ER 65 at 68.
[72]See, eg, Assicurazioni Generali SpA v Arab Insurance Group [2003] 1 WLR 577 at 578-579 [9], 584 [197], quoting Tanfern Ltd v Cameron-MacDonald (Practice Note) [2000] 1 WLR 1311 at 1317 [32]; [2000] 2 All ER 801 at 808, which, in turn, quotes G v G (Minors: Custody Appeal) [1985] 1 WLR 647 at 652; [1985] 2 All ER 225 at 229; but cf In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] 1 WLR 1911 at 1943-1944 [92]-[96]; [2013] 3 All ER 929 at 960-961.
Counter-factual test and the two issues for the appeal
The counter-factual question at trial concerned whether Apotex would have sought and obtained listing of its clopidogrel products on the PBS on 1 April 2008, and hence launched its generic product, if it had not been subject to the interlocutory injunction.
When a counter-factual inquiry is undertaken, the only facts that should be removed from "real world" lawful activity that has taken place are those that are necessary for the counter-factual.[73] As senior counsel for the Commonwealth correctly submitted, the only facts that should be removed from the inquiry in this case are the order by Gyles J on 25 September 2007 granting the interlocutory injunction and anything that is inextricably connected with the order, such as the reasons that his Honour gave for the decision.
[73]Bostock v Clayton County, Georgia (2020) 140 S Ct 1731 at 1739.
In assessing the counter-factual by reference to what would have been done in all the circumstances of the real world absent the order of Gyles J and anything inextricably connected with it, the focus is upon what Apotex would have done. As the Full Court correctly concluded (in rejecting the relevance of opinions of the Managing Director of Sanofi), the focus is not upon what others, who did not have all the information and were not in the position of the decision maker, thought that Apotex might have done.[74]
[74]The Commonwealth v Sanofi (formerly Sanofi-Aventis) (2023) 411 ALR 315 at 386 [331].
In other words, in assessing what Apotex would have done if the interlocutory injunction had not been ordered, all facts in the real world fall to be considered in assessing the counter-factual question with the exception of the order, and then the reasons for decision given by Gyles J, and any other matter inextricably connected with the decision of Gyles J concerning the interlocutory injunction.
In applying that approach, there are two issues. A consideration of each shows that this appeal must be dismissed. The first is that the concurrent findings of the primary judge and the Full Court that supported the counter-factual conclusion were open and are not clearly wrong. The second is that, in any event, it was not open to the Commonwealth on this appeal to revisit many of the factual findings that it sought to reopen.
Basis for the concurrent findings – in outline
The trial before the primary judge ran for 17 days. The primary judge dismissed the Commonwealth's application for compensation. The primary judge's reasons for decision were detailed — comprising 698 paragraphs and 164 pages. The factual analysis alone took 224 paragraphs and more than 50 pages. The ultimate conclusion of the primary judge, as well as his Honour's reasoning, were relevantly affirmed, unanimously, by the Full Court after a wide-ranging appeal over seven days. The Full Court's reasons comprise 392 paragraphs and more than 100 pages.
In the Full Court in respect of this part of the appeal — ie would Apotex have obtained PBS listing of its clopidogrel products on 1 April 2008 if the injunction had not been granted — the parties prepared an agreed chronology which set out the documents and ID references for the documents which the primary judge referred to as well as those which the primary judge did not refer to ("the Joint Chronology FC").
In this Court, the parties provided an amended Joint Chronology signed by senior counsel for both parties ("the Joint Chronology HC").[75] The Joint Chronology HC only listed those items relevant to the Commonwealth's grounds of appeal and Sanofi's notice of contention and added some new items which were either before the Full Court but not the subject of a discrete item in the Joint Chronology FC or concerned matters relating to the procedural history of the proceedings. The Joint Chronology HC ran for more than 65 pages and included 244 separate items. It included cross references to other documents including affidavits, court documents, extracts of cross-examination, extracts of submissions before the primary judge and the Full Court, and organization charts. It was divided into Pts A to J:
[75]The Joint Chronology HC listed the documents in chronological order and, where relevant, listed the date and time the relevant document was sent or received by reference to Sydney time and Toronto time. In these reasons for decision, the listed Sydney times have been used, unless otherwise specified.
A: Pre 2007;
B: GenRx/Apotex Canada communicate about a possible launch of clopidogrel in Australia;
C: GenRx communicates with the TGA, Sanofi and its customers about a possible launch of clopidogrel and commences patent revocation proceedings against Sanofi;
D: PBS Listing Application;
E: Response to interlocutory injunction application;
F: Interlocutory hearing;
G: GenRx (now known as Apotex) and Apotex Canada communicate between the grant of the interlocutory injunction and judgment in the patent revocation proceedings about how to respond to a final decision by Gyles J;
H: Judgment and appeal;
I: Apotex's PBS listing and claims;
J: Dramatis Personae.
Against each entry, it identified where that entry was addressed by either or both of the primary judge and the Full Court. The "new items" were marked with an asterisk: Pt A (three new items); Pt F (six new items); Pt G (three new items); Pt H (three new items); and Pt I (38 new items). In addition to the Joint Chronology HC, only "[t]he most critical documents" were reproduced in the parties' Joint Book of Further Materials which comprised more than 1760 pages divided into four volumes.
As is self-evident, this Court was not provided with a complete, or the same, record as that provided to the Courts below. The Joint Chronology HC was prepared at the request of members of this Court who, having expressed concern that this matter may not be an appropriate vehicle for the grant of special leave, were reassured that a chronology might be "of some considerable use in this Court, and the mysteries will disappear".[76] The Joint Chronology HC was one (of a number) of steps taken by the Court to seek to confine the issues in dispute between the parties prior to the hearing of this appeal,[77] and to reduce the material this Court would have to consider.
[76]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [2023] HCATrans 184 (18 December 2023) at 10 [lines 332-349].
[77]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [2023] HCATrans 184 (18 December 2023) at 21-22 [lines 870-895].
It is both inappropriate and unnecessary to repeat the detailed analysis of the Courts below. Given the manner in which the appeal developed, it is, however, necessary to explain why the concurrent findings of the primary judge and the Full Court were not clearly wrong. Each of the matters below is drawn from the detailed analysis and those concurrent findings.
(1)Parties, the patent in respect of clopidogrel, and the North American litigation
The Apotex group of companies was at all material times a substantial manufacturer and distributor of generic medicines worldwide. Mr Roger Millichamp was appointed Managing Director of Apotex Australia (earlier GenRx Pty Ltd and now Apotex Pty Ltd) on 1 March 2006. Mr Millichamp reported to Mr Michael Weingarten (Vice President of Sales at Apotex Canada) from about March 2006 to June 2007, and to Mr Andrew Kay (President of Apotex International Inc) from about June 2007 to late 2008 or early 2009. Mr Weingarten reported to Mr Kay and both were based in the Apotex Canada head office. Both reported to Dr Barry Sherman, the co-founder of Apotex Canada, its CEO and Chairman and the "ultimate controller" of the Apotex group.
In short, Mr Millichamp was at the bottom of a reporting chain that culminated with Dr Sherman. It was correctly common ground throughout these proceedings that Dr Sherman called the shots. Dr Sherman would make any significant decisions such as whether Apotex would launch a product in Australia "at risk" of damages for patent infringement.
Apotex Canada developed a generic clopidogrel product which it sought to bring to market in the United States, Canada and Australia. Apotex Canada (through its United States affiliate "Apotex US") first sought approval to sell generic clopidogrel bisulfate tablets in the United States in 2001. In 2002, Sanofi's United States operation sought to restrain Apotex Canada and Apotex US from infringing its United States patent for clopidogrel. The parties reached a settlement, by an amended settlement agreement, in 2006. However, Apotex Canada and Apotex US sought to avoid the settlement agreement after the agreement was not approved by State Attorneys-General. The United States District Court initially declined to restrain Apotex Canada and Apotex US from launching its product, so the launch proceeded on 8 August 2006. However, on 31 August 2006, a preliminary injunction was granted to Sanofi, restraining Apotex Canada and Apotex US from infringing Sanofi's United States patent.
In 2010, Sanofi was awarded US$442,209,362 in damages (excluding interest and costs), calculated under the amended settlement agreement, representing 50% of the Apotex group's net sales. Despite the size of the US$442 million damages award, the award was a "highly favourable outcome for Apotex" because the damages were calculated under the amended settlement agreement by reference to Apotex Canada and Apotex US's sales, rather than Sanofi's lost profit. The damages would have potentially been much greater without the benefit of the agreement. In short, with the benefit of the amended settlement agreement, the launch by Apotex Canada of its product in the United States was not "genuinely 'at risk'".[78]
[78]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 282-284 [206]-[218].
Apotex Canada also sought to launch its clopidogrel product in Canada. An order of prohibition sought by the relevant Canadian Sanofi entities ("Sanofi Canada"), and issued by the Federal Court of Canada in 2005, prevented Apotex Canada from obtaining regulatory approval. A final appeal against those orders was dismissed by the Supreme Court of Canada on 6 November 2008. Separate proceedings brought in the Federal Court of Canada by Sanofi Canada, alleging infringement of its Canadian patent, were discontinued in November 2014 (pending an appeal to the Supreme Court of Canada) following the relevant Sanofi Canada and Apotex entities reaching a settlement agreement.[79]
[79]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 282 [201]-[205].
The approach taken by Apotex in Australia arose in the context of Apotex Canada's lack of success in litigation in the United States and Canada.
(2) Events leading up to September 2007
Apotex began to consider launching its generic clopidogrel product in Australia in early 2006. By June 2006, email correspondence between Mr Weingarten and Dr Sherman revealed that Dr Sherman intended to launch the product "at risk" in Australia once Therapeutic Goods Administration approval was obtained, but only if Apotex Canada was successful in its litigation in the United States and Canada (which it was not).
On 20 February 2007, Dr Sherman emailed Mr Weingarten and Mr Millichamp, setting out a "[p]lan" for the launch of Apotex's generic clopidogrel product in Australia. Dr Sherman's plan included: filing a claim seeking to invalidate Sanofi's patent in May or June 2007; informing Sanofi of Apotex's intention to launch unless Sanofi obtains an injunction supported by an undertaking as to damages; and launching the product if Sanofi did not give the undertaking and obtain the injunction.
By April 2007, albeit without concluded results from the litigation in the United States and Canada, Dr Sherman had changed his mind about launching at risk in Australia only if Apotex Canada was successful in the United States and Canada. In an email from Mr Kay to Mr Lydeamore (Vice President Business Development at Apotex Canada) on 13 April 2007, Mr Kay repeated Dr Sherman's instructions, "[Dr Sherman]'s instruction is to attempt to launch at risk and then invalidate".
On 22 June 2007, three days after Sanofi's United States patent had been upheld in the United States, Mr Millichamp sent an email to Mr Kay, setting out his recommendation that Apotex Australia launch a clopidogrel product in Australia. Attached to that email were tables setting out the projected sales figures in two scenarios should Apotex Australia launch the product. However, that email did not contain any consideration of the financial impact on Apotex should a claim for patent infringement by Sanofi be upheld. The email, including its attachment, was not an assessment of the financial risk versus reward from launching.
On 25 June 2007, following an earlier request from Mr Kay, Mr Millichamp provided Mr Kay with further information concerning a proposed launch of Apotex's product. Mr Millichamp explained that he would not propose a launch without PBS listing because sales would be low, "virtually zero without PBS reimbursement", in that scenario. Mr Millichamp said that Apotex should submit an application for listing once it was sure that no injunction would be imposed and that "we will need to let the judge know that we plan to PBS list". Mr Millichamp also estimated the amount of a bank guarantee that might be required from Apotex as security for costs in resisting any injunction could be $50‑70 million for "one year's damages".
The same day, 25 June 2007, Mr Kay sent Dr Sherman an email, asking him to "please re-confirm or otherwise our approach in Australia". Mr Kay explained that the approach which he sought to have confirmed was that upon the expected grant of approval by the Therapeutic Goods Administration in July/August 2007, "we will move towards launch and initiate revocation proceeed[ing]s [sic]". After some responses and exchanges that were wholly redacted for legal professional privilege, Dr Sherman sent an email to Mr Kay at 11.44am on 26 June 2007, only part of which was not redacted, that said, "[w]e will stay with bisulfate in Australia", but there was no evidence of the context of this email or the conditions upon which such a decision was being made or to be implemented. After this, Dr Sherman sent a further email to Mr Kay at 11.49am, which was entirely redacted. Mr Kay responded to this further email at 11.54am, asking Dr Sherman to "[p]lease advise when you have decided whether to pursue revocation of [Sanofi's] patent and if you wish us to move to launch at risk".
On 27 June 2007, two emails were sent by Dr Sherman in response. The content of those emails, received in Australia at 4.44am and 5.12am, was entirely redacted on the basis of legal professional privilege. An email from Mr Millichamp to some of his colleagues at Apotex Australia at 11.23am that day, referring to matters that had been redacted for legal professional privilege, said "FYI –Game on !!!". Mr Millichamp also emailed Mr Haas (Corporate Project Manager, New Product Demand Planning at Apotex Canada) later that day, saying in a heavily redacted email: "[i]f we are successful in avoiding an injunction we will plan to launch subject to [Dr Sherman]'s further advice/approval".
Mr Haas responded to Mr Millichamp at 12am on 28 June 2007 thanking him for the update and asking that "[o]nce known, please advise as to estimated launch date so that I can have forecasts shifted out accordingly". Mr Haas told Mr Millichamp that he would, "however, initiate blister tooling activities to determine timing for providing [Mr Millichamp] with pack count desired for AUS market" as "tooling leadtimes can be as long as 6 months".
On 28 June 2007 at 10.28pm, Mr Millichamp forwarded an email to Mr Haas with redacted words that preceded a statement that "as per instructions from [Dr Sherman] the plan (in outline) for clopidogrel is as follows". The plan that was then set out involved seeking to have the Sanofi patents revoked and resisting an application by Sanofi for an interlocutory injunction which, if Apotex were successful, would lead to a launch after PBS listing at the "earliest [in] December [20]07". Mr Millichamp said:
"Therefore if we are successful and are able to launch we will need product (blister packed by Apotex) in Australia ideally end October but latest Mid November."
Mr Millichamp concluded by saying:
"Please confirm when you would like purchase orders raised. We are not sure that we can launch yet so need to know if we should place orders in anticipation or should wait. [Dr Sherman] has made it clear that he does not want to waste money on launch activities until we are clear on what we can do".
The same day, 28 June 2007, at 11.02pm, Mr Haas responded by saying that the "[s]trategy from my side is to get everything in place so that we can proceed with commercial manufacture immediately once given the go-ahead". Mr Haas then replied again at 11.44pm saying "One further question[.] Is [Dr Sherman] in the loop the strategy below (potentially launch end October but latest Mid November)?".
On 29 June 2007, at 5.19am, Jeremy Desai (Executive Vice-President of Research and Development at Apotex Canada) sent an email to some of his colleagues in Apotex Canada clarifying "our position for Australia". The email stated that: Apotex would be notifying Sanofi of its intention to launch in Australia; Apotex expected Sanofi to sue Apotex; Apotex would litigate Sanofi's patent in court; Apotex would not be making any launch stocks even though they expected approval in the next couple of months; and Apotex would file "ASAP".
On 8 August 2007, Mr Kay said in an email to Mr Haas and Dr Sherman that "[w]e are assuming that [Sanofi's application for interlocutory relief] will be successful and are thus not planning to launch at this stage". Dr Sherman responded to this email, instructing that Sanofi be put on notice as to Apotex's intention to launch the generic clopidogrel products "ASAP". Mr Kay's response the following day is redacted. Mr Millichamp's response to Mr Kay, copying Dr Sherman, is also heavily redacted but includes the passage that if Apotex is successful in defending against an injunction "we would like to launch as soon as possible. The earliest date that we can get PBS (Government reimbursement) listing is Dec 07". Mr Millichamp said that Apotex Australia had asked Mr Haas to prepare a launch plan "so that in the event we are successful we can launch as soon as possible". Plainly, without the context of the heavily redacted email it is impossible to assess the extent to which Mr Millichamp was suggesting an unconditional commitment. Mr Caccamo (Director, Global Demand Planning at Apotex Canada) replied to the heavily redacted email from Mr Millichamp, saying that launch plans had been aligned accordingly. Mr Kay also replied to the heavily redacted email, copying Dr Sherman, saying "[t]hanks for the comprehensive update[.] OK by me", as did Mr Haas, who thanked Mr Millichamp "for providing further clarity". Mr Kay also sent another reply to Mr Millichamp's heavily redacted email, addressed to Mr Millichamp only, saying "[t]his looks fine".
Subsequently, Apotex took steps towards having its products listed on the PBS, to commence proceedings against Sanofi seeking to invalidate their patent, and to advertise to the market that they were taking steps to launch a generic clopidogrel product.
On 17 August 2007, Mr Millichamp provided a letter to the sales team at Apotex Australia, suggesting it should be circulated to customers, which contained the following information: that Apotex intended to launch its clopidogrel product in Australia; that Apotex had commenced legal proceedings to invalidate Sanofi's patent; that Apotex expected that Sanofi may apply for interlocutory relief to prevent the launch; and that a trial concerning any final relief (in respect of the validity of the patent) would occur within 12-18 months of the date of letter.
(3) Two unexpected events in September 2007
Two important, but unexpected, events occurred in September 2007. The first occurred on 4 September 2007. The second was held to have occurred on 21 September 2007. By itself, the first event was effectively meaningless to the counter-factual in this case. But when combined with the second event it had significant potential to change any calculus concerning whether Apotex would launch at risk.
The first unexpected event was that Apotex inadvertently missed the 1 September 2007 deadline for applications for PBS listing by 1 December 2007. Apotex's application was unintentionally submitted late, and subsequently withdrawn on 4 September 2007 after being advised by the Department of Health and Aged Care that day that the late submission would not be accepted. As such, at the time of the hearing of the interlocutory injunction, the earliest available PBS listing for Apotex's clopidogrel products was 1 April 2008, with the deadline for applications falling on 1 December 2007. Mr Millichamp advised Mr Kay of the failure to submit the application on time on 4 September 2007. But that email was not copied to Dr Sherman. On 5 September 2007, Mr Haas responded to Mr Millichamp's email to Mr Kay saying that "[c]onsidering the magnitude of this launch, [he] would like to have all upfront activities completed so that [they] are in a favo[u]rable position once [they] are given the green light to manufacture" but that they would not order the packing components until they had "a favourable litigation outcome".
The unchallenged, and (in this Court) unchallengeable, finding of the primary judge was that Dr Sherman was only notified that the listing date had been missed by email from Mr Haas on 15 September 2007 (at 2.37am Sydney time). The email quoted the last communication received from Mr Millichamp that in the event that they were successful in defending against an interlocutory injunction application from Sanofi, the earliest that they could get PBS listing was now April 2008 and that, in that case, they required stock in Australia towards the end of February/start of March 2008 "assuming that we are able to launch". The emphasis was in the original.
The second unexpected event was foreshadowed only in the most general of terms at a directions hearing on 13 September 2007 when the judge who would hear the interlocutory injunction, Gyles J, indicated a preference for an expedited final hearing. It appears that the directions hearing was heard before both Gyles and Bennett JJ. Following the directions hearing, Mr Millichamp emailed Mr Kay with updates including the following, "[t]he indication from the judge was that they want to move towards a final trial sooner rather than later. The next six months was mentioned, subject to availability of expert witnesses etc.". Mr Millichamp's email update also said "Justice Bennett will monitor progress of the case and take control if Justice G[y]les is unavailable. The Judges had clearly read, in detail, and understood our patent revocation submission". This foreshadowing said nothing about what date would be selected, and left open the precise identity of the trial judge and, therefore, the likely period of time that a decision would take. The second unexpected event occurred on 21 September 2007, at the time when Gyles J delivered orally his reasons for granting the interlocutory injunction. At that time, Gyles J informed the parties that the final hearing would commence before his Honour on 28 April 2008. The significance of this second unexpected event was not merely that the hearing would take place only four weeks after the earliest date for PBS listing. The significance was also that the judge would be Gyles J, who would retire (and therefore have to deliver a decision) by 22 August 2008.
Between 15 September 2007, when the first of these unexpected events (the missed deadline for earlier PBS listing) was notified to Dr Sherman, and 18 September 2007, when the hearing of the interlocutory injunction began, there was no evidence of any communication between Dr Sherman and any person in Apotex Australia about the significance of the first unexpected event (and no evidence that Dr Sherman was even aware of the foreshadowed possibility, in vague terms, of the second unexpected event). The emails from Dr Sherman in this period were as follows.
On 14 September 2007 (12.26pm Sydney time), Dr Sherman emailed various people in Apotex Canada asking questions about the tablets to be produced and saying: "We may be launching in Australia soon. Also, it is possible that we will relaunch in the US within months.". There was no suggestion that Apotex Canada and Apotex US ever relaunched in the United States.
On 15 September 2007 (2.13am Sydney time), Dr Sherman emailed the same people in Apotex Canada asking: "[w]ho will deal with determining if present inventory can be repacked for Australia". It appears that it was in a reply to this email that Dr Sherman was first informed of the missed listing date and that the first available listing date would be 1 April 2008, as set out at [73] above. No emphasis was placed on this point and there was nothing to alert Dr Sherman to the significance of it. Instead, the reply email emphasised (in bold and underlining) only the words "[i]n this case we will require stock in Australia towards the end of February / Start March 2008 assuming that we are able to launch", as set out at [73] above. Dr Sherman replied asking for details about the longevity of the tablets.
(4) Interlocutory injunction and undertaking as to damages
On 18 September 2007, Sanofi's application for an interlocutory injunction was heard by Gyles J. Apotex offered to provide security for costs of $50 million if the injunction was not granted. That security for costs would be provided as a bank guarantee but there was no evidence as to the cost to Apotex of the bank guarantee. At the hearing, senior counsel for Apotex "was explicit and direct in stating that Apotex would apply for listing as at 1 April 2008 if there was no interlocutory injunction".[80] As to the undertakings as to damages, senior counsel for Sanofi said that "[t]he government hasn't applied to be a party to these proceedings, but our undertaking as to damages ... is not limited to the parties".
[80]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 293-294 [266]-[272].
On 19 September 2007, Mr Millichamp emailed Dr Desai, saying "[w]e are of course hoping that we get some great news on Friday that we are free to sell". This email was not copied to Dr Sherman.
On 21 September 2007, in the Federal Court, Gyles J gave oral reasons for decision, granting the interlocutory injunction to restrain Apotex from engaging in conduct that would infringe Sanofi's patent. On 25 September 2007, orders to that effect were made by Gyles J.
The interlocutory injunction made by Gyles J was made upon Sanofi giving the usual undertaking as to damages, set out in full below. Sanofi's undertaking extended to compensating third parties for losses suffered. Sanofi was aware that a third party who could suffer loss was the appellant, the Commonwealth of Australia, which might have paid lower pharmaceutical subsidies, if the injunction had not been made, due to the effect of competition in reducing prices. The undertaking and interlocutory injunction were as follows:
"UPON the Respondent/Cross-Claimant [Sanofi] undertaking to the Court to:
(a)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 Order 1 set out below or any continuation (with or without variation); and
(b)pay the compensation referred to in (a) to the person or persons there referred to.
THE COURT:
1.ORDERS that, pending the determination of the proceedings or further order, the Applicant/Cross-Respondent [Apotex] whether by itself, its directors, officers, servants, agents or otherwise, be restrained from infringing Australian Letters Patent No 597784 (the Patent) and, in particular, from engaging in the following acts within the patent area (as that term is defined in Patents Act 1990 (Cth)), without the license or authority of the Respondent/Cross-Claimant [Sanofi]:
(a)making, selling or otherwise disposing of the products known as GenRx Clopidogrel, Apo-Clopidogrel, Chemmart Clopidogrel and Terry White Chemists Clopidogrel or any other pharmaceutical composition the active ingredient of which is clopidogrel bisulfate, a compound claimed in claims 1, 3, 10 and 11 of the Patent (collectively, the GenRx Clopidogrel Products);
(b)offering to make, sell or otherwise dispose of the GenRx Clopidogrel Products;
(c)using or importing the GenRx Clopidogrel Products;
(d)keeping the GenRx Clopidogrel Products for the purpose of doing any of the acts described in sub-paragraphs (a) to (c) above;
(e)authorising other people to engage in any of the acts described in subparagraphs (a) to (d) above..."
(5) Events after the interlocutory injunction
The interlocutory injunction, supported by the undertaking as to damages, had been expressed to be "pending the determination of the proceedings or further order". As Gyles J had informed the parties on 21 September 2007, the hearing concerning the "further order[s]", including the validity of Sanofi's patent and the final injunction, commenced on 28 April 2008. This start date of the hearing was a mere four weeks after the earliest date when Apotex could have obtained PBS listing in order to launch at risk, had the interlocutory injunction not been made. The trial ran for 11 days. The last hearing date was 15 May 2008.[81]
[81]Apotex Pty Ltd (formerly Genrx Pty Ltd) (ACN 096 916 148) v Sanofi-Aventis (2008) 78 IPR 485.
On 28 July 2008, Mr Millichamp provided Mr Kay, by email, a set of risk/reward calculations for scenarios including the decision that would need to be made if there were success at trial in invalidating Sanofi's patent: "whether or not to launch at risk of the Full Court reversing the judgment on appeal". Mr Millichamp explained that, although the preferred position in Australia was to launch, the potential exposure to damages could be in the range of $166 million. Mr Millichamp asked if Apotex Canada "is comfortable for us to launch at risk of Full Court reversal on Sanofi appeal knowing the potential risk of damages should Sanofi prevail".
On 4 August 2008, Mr Smith (the Chief Financial Officer of Apotex Australia) emailed various people, including Mr Millichamp, saying:
"If the Court finds in our favour, then it is likely we will launch but it is not an automatic decision. In this situation, the innovator (Sanofi) would inevitably appeal - and that may require Apotex to give guarantees against possible damages should we lose the appeal. The numbers are very large and this will not be a decision made in Australia!"
On 6 August 2008, in an email chain which included Mr Millichamp's email of 28 July 2008 (which provided the risk/reward calculations), Mr Kay emailed Mr Millichamp saying:
"Thinking further about it, I wonder if the best outcome would be that we win at first instance, [Sanofi] appeal and the injunction remains in place pending appeal. That way, we don't expose ourselves to potentially ruinous damages, but would collect damages off [Sanofi] for the further period of being off the market in the event [Sanofi's] appeal fails."
On 12 August 2008, Mr Kay emailed Mr Millichamp saying:
"As discussed last week my view is that in the event of our success and should [Sanofi] decide to appeal we should in some way allow the injunction to continue, and seek damages should any appeal fail to go [Sanofi’s] way."
(6) Final injunction and the appeal
On 12 August 2008, Gyles J delivered judgment on Apotex's claim for revocation of the Patent, and Sanofi's cross-claim for infringement of it, in Sanofi's favour.
On 19 August 2008, the "further orders" contemplated by the interlocutory injunction, being the final determination by Gyles J of the validity of Sanofi's patent, were made following the reasons for decision. Justice Gyles found that four of the claims of the patent were valid and granted a final injunction.
On 13 October 2009, following an appeal to the Full Court of the Federal Court, the orders made by Gyles J on 19 August 2008 were overturned and orders were made to revoke the patent and to set aside the final injunction.
On 15 February 2010, Apotex finally made an application to list its clopidogrel products on the PBS. The application was expressed to be conditional upon the refusal by the High Court of special leave to appeal from the decision in the Full Court of the Federal Court.
On 12 March 2010, special leave to appeal was refused by this Court. The same day, free from any risk, Apotex commenced taking orders for its clopidogrel products. Apotex's first shipment was received on 23 March 2010 and its products were listed on the PBS on 1 May 2010.
(7)Commonwealth's claim for compensation on the undertaking
On 11 April 2013, more than three years after special leave had been refused, the Commonwealth sought compensation from Sanofi on the undertaking as to damages that Sanofi had given on 25 September 2007. The Commonwealth alleged that it had suffered approximately $325 million in losses in the period from the interlocutory injunction on 25 September 2007. But, as explained at the outset of these reasons,[82] about $314 million of the Commonwealth's alleged losses occurred after 19 August 2008 when Gyles J finally resolved the proceedings for an injunction with his final orders superseding the interlocutory injunction that the undertaking as to damages supported.
(8) Basis for the counter-factual decision of the primary judge
[82]See [7] above.
A central issue before the primary judge in the Commonwealth's claim for compensation on the undertaking concerned a counter-factual question: if the interlocutory injunction had not been made on 25 September 2007, would Apotex have taken the enormous risks of seeking, and obtaining, PBS listing in April 2008 and, upon listing, launching its generic clopidogrel products only: (i) four weeks before a final hearing that might inform the assessment of that risk; and (ii) at most, just over four months before a decision that could remove that risk?
On the central counter-factual issue, the primary judge did not make any positive finding. His Honour concluded that the Commonwealth had not proved that before the application deadline of 1 December 2007, Apotex would have sought PBS listing for April 2008 so that Apotex could launch its generic clopidogrel products at risk on or after 1 April 2008. The primary judge's failure to be satisfied that the Commonwealth had proved its counter-factual conclusion was supported by a series of factual findings as to real world events. For reasons which are explained in detail later, it is unnecessary and inappropriate in an appeal to this Court to attempt to recount the entirety of the many factual findings upon which the primary judge's decision was based. It suffices to emphasise four of the important findings of the primary judge, according to the chronology of events.
First, the primary judge found that Dr Sherman, rather than Mr Millichamp, was the relevant decision-maker as to whether to launch at risk in Australia. The primary judge did not accept Mr Millichamp's evidence that Dr Sherman's 20 February 2007 email was sufficient instruction on which Mr Millichamp would have been entitled to act to launch at risk in late 2007, without reverting to Dr Sherman for confirmation and final approval.[83] That evidence from Mr Millichamp was inconsistent with later email correspondence in which confirmation as to Dr Sherman's present approach to launching at risk had been repeatedly sought from Dr Sherman.[84] The primary judge also relied upon Mr Smith's email on 4 August 2008 which indicated that even if Apotex was successful in invalidating Sanofi's patent, it was not inevitable that Apotex would launch because there remained the risk of an appeal.[85]
[83]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 295 [276]-[277].
[84]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 307 [339]-[340].
[85]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 307 [297].
Secondly, the primary judge found that Dr Sherman could, and did, change his mind at times about launching at risk. The primary judge held that although Apotex's plan to launch at risk was initially dependent on the outcome of litigation in Canada or the United States,[86] the 20 February 2007 email from Dr Sherman indicated that "Dr Sherman was, at this stage, intending to have Apotex Australia launch at risk in the event that Sanofi did not obtain any interlocutory injunction".[87]
[86]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 286 [232].
[87]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 285-286 [229]-[231].
Thirdly, the primary judge found that Apotex would not launch in Australia without PBS listing. This finding was based upon the 25 June 2007 email from Mr Millichamp. The primary judge found that Dr Sherman was only told on 14 September 2007 (Toronto time) that Apotex had missed the PBS listing date for December 2007 (and therefore that the earliest possible listing date would be 1 April 2008).[88]
[88]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 295 [279]-[280].
Fourthly, the primary judge concluded that the email correspondence in June 2007, particularly the email on 27 June 2007, did not reflect an unconditional intention for Apotex to launch at risk. Rather, that correspondence reflected "an understanding on the part of Mr Kay that it was necessary, or at least desirable, to obtain confirmation from Dr Sherman as to his intention with respect to Australia and whether or not Apotex Australia should seek to revoke the Patent and 'launch at risk'".[89] The primary judge considered the June 2007 email correspondence in light of the fact that Apotex was not expecting to succeed in resisting an interlocutory injunction[90] and in light of the 17 August 2007 letter from Apotex Australia to its customers in which Apotex Australia "had not committed itself to launching in the event no interlocutory injunction was granted".[91] The primary judge thus rejected the oral evidence of Mr Millichamp that a decision had been made in February 2007, and that in the 27 June 2007 email Mr Millichamp was merely "covering all angles".[92]
(9)Six of the findings of the primary judge on the counter-factual
[89]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 289 [243].
[90]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 291 [252]-[255]. See also at 292 [260].
[91]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 297 [288].
[92]The Commonwealth v Sanofi (formerly Sanofi-Aventis) [No 5] (2020) 151 IPR 237 at 289-290 [246]-[251].
At 10.28 pm on 28 June 2007, Mr Millichamp sent an email to Mr Haas which was copied to several executives of Apotex Australia. The email, which was partially redacted, stated:
"as per instructions from Barry the plan (in outline) for clopidogrel is as follows:
1) Seek to revoke the Sanofi patents at time of TGA approval ...
2) Sanofi will apply for interlocutory relief. If they get it and we are enjoined we will not be able to launch until after final trial (if we are successful) which could be 18 months away from now or more.
3) If we are successful in defending our position vs Sanofi and an injunction is not granted by the courts then we will launch.
...
We are not sure that we can launch yet so need to know if we should place orders in anticipation or should wait." (emphasis added)
Another document that the primary judge treated as evidence of a lack of firm intention on the part of Apotex Australia was a circular sent to Apotex Australia's staff on 17 August 2007, under Mr Millichamp's name, on the basis that staff could provide the circular to customers. The circular stated, "[w]e intend to launch [a clopidogrel] product into the Australian market in the near future". The circular outlined the potential for that launch to be affected by legal proceedings. It noted that, if Sanofi were to apply for an injunction, then such an application would be "vigorously defend[ed]", although Apotex Australia would refrain from seeking "PBS listing for clopidogrel or take orders from pharmacists until the application has been determined". The circular added, "[a]ssuming Sanofi-Aventis do apply for an interim injunction, then the decision whether to launch these products will be delayed until the outcome of that application has been determined".
The primary judge treated this circular as evidence that "Apotex Australia had not committed itself to launching in the event no interlocutory injunction was granted".[352] The Full Court agreed with the primary judge's characterisation of its effect.[353]
[352]Sanofi (No 5) (2020) 151 IPR 237 at 297 [288].
[353]Sanofi FFC (2023) 411 ALR 315 at 342 [118].
On 16 August 2007, Apotex Australia commenced the revocation proceedings. The next day, it notified Sanofi of its intention to market and sell its clopidogrel products in the near future. From that time until early September 2007, there was an exchange of correspondence between the parties' respective solicitors seeking and denying undertakings.
On 1 September 2007, Apotex Australia lodged its application for a PBS listing. However, it withdrew the application soon after because it was advised that it was too late to secure a listing in December 2007. Apotex Australia then recalibrated its timetable with a view to securing a listing from 1 April 2008.
On 6 September 2007, Apotex Australia advised Sanofi that it was prepared to undertake to not have its clopidogrel products listed on the PBS and to not take orders from pharmacists for its supply until 11 October 2007, provided that any interlocutory injunction brought by Sanofi had been commenced and determined by that date.
On 14 September 2007, Apotex Australia offered undertakings to keep accounting records of, inter alia, units of clopidogrel product sold and to provide security of $50 million within 28 days for any damages and costs that may be ultimately awarded against it if Sanofi's patent was not revoked.
In the meantime, the revocation proceedings were listed for directions on 13 September 2007. After the directions hearing, Mr Millichamp enthusiastically reported to Mr Kay that, "the court wants our case to move quickly" with a possible date for a final hearing within "the next six months". Mr Millichamp reiterated that "[o]ur plan is to launch to customers (take orders) immediately, assuming that we are free to sell, and then supply product in early 2008 for an April PBS listing".
As noted, on 17 September 2007, Sanofi filed its cross-claim and application for an interlocutory injunction. It also proffered an undertaking as to damages to support its application. On the same day, Mr Millichamp swore an affidavit in which he reiterated Apotex Australia's intention to "apply for listing of its clopidogrel ... tablets at the next available opportunity, which is by 1 December 2007". He noted that listing the clopidogrel products would trigger a 12.5% reduction in price for all clopidogrel brands and that Apotex Australia offered $50 million as security for damages and costs that may be awarded in favour of Sanofi if it succeeded at a final hearing.
Mr Millichamp's affidavit was read during the interlocutory hearing before Gyles J on 18 September 2007. During that hearing, the following exchange occurred:
"[Gyles J]: No, but it is said that you will not get your PBS listing until April.
MR CATTERNS [senior counsel for Apotex Australia]: Yes. We agree, your Honour. We apply on 1 December and we get it [ie, PBS listing] on 1 April.
[Gyles J]: And being practical about it, that's the time you'll launch is that right?
MR CATTERNS: Yes, your Honour." (emphasis added)
Mr Catterns then described the pre-launch activities that Apotex Australia would undertake prior to 1 April 2008, including "taking orders now, even before we apply for PBS listing and unless restrained we would do so". Mr Catterns informed the Court that it was "virtually impossible" for Apotex Australia not to obtain a listing on the PBS effective from 1 April 2008 and that "both sides" regarded listing on 1 April and the consequential 12.5% price reduction as "inevitable". Senior counsel for Sanofi, Mr Bannon, was not overawed by the occasion before Gyles J. He did not demur to any of these statements. He noted that the Commonwealth had not applied to be a party to the proceedings but observed that his client's undertaking as to damages was "not limited to the parties".
The next day, being 19 September 2007, Mr Millichamp reported on the hearing to an executive of Apotex Canada. He observed that, even if Apotex Australia was injuncted, he expected to win at trial but added, "[w]e are of course hoping that we get some great news on Friday that we are free to sell".
The course of the litigation from the time of the grant of the injunction is set out above.[354] In the immediate period prior to the handing down of judgment in the revocation proceedings (ie, 12 August 2008), emails passing between Mr Millichamp, Mr Kay, Mr Smith and another executive of Apotex Canada reveal they were hesitant at that time to list and launch the clopidogrel products at risk if Apotex Australia was successful in having the patent revoked.[355] Further, after Apotex Australia succeeded on appeal to the Full Court, it applied for a PBS listing of its clopidogrel products on 10 November 2009, but withdrew that application on 21 December 2009 as the special leave application filed by Sanofi in this Court was unlikely to be heard before the last day that it could withdraw its application. On 15 February 2010, Apotex Australia relodged its PBS listing application, but requested the approval be made conditional on the outcome of Sanofi's application for special leave to appeal.
[354]See above at [343]-[345].
[355]See reasons of Jagot J at [307].
After Sanofi's application for special leave to appeal was refused on 12 March 2010, Apotex Australia notified the Department of Health that its PBS listing application was now unconditional. It secured a listing of its clopidogrel products on the PBS on 1 May 2010, triggering the 12.5% price reduction.
The primary judge's reasoning
The primary judge set out the effect of some of this material concerning the events up to the granting of the injunction by Gyles J. His Honour construed the email from Mr Millichamp of 27 June 2007 that stated "we will plan to launch subject to Barry's further advice / approval" as suggesting that "Dr Sherman had not finally committed to a launch at risk in Australia and that it would be necessary for Mr Millichamp to obtain final approval to launch at risk in the event that no interlocutory injunction was granted".[356] His Honour did not accept Mr Millichamp's oral evidence to the effect that the comment in his email of 27 June 2007 did not reflect any requirement to obtain further approval from Dr Sherman.[357]
[356]Sanofi (No 5) (2020) 151 IPR 237 at 290 [251].
[357]Sanofi (No 5) (2020) 151 IPR 237 at 289-290 [249]-[251].
Having construed the email as evidence demonstrating that any intention on the part of Dr Sherman to list and launch was provisional, the primary judge discounted the events that occurred during the course of the revocation proceedings as demonstrating any firmer intention on Dr Sherman's or Apotex Australia's part. In particular, the primary judge identified "two related developments" in September 2007 as affecting whether Dr Sherman would have decided that it was preferable not to launch at risk even if Gyles J refused the interlocutory injunction.[358] The first development was the notification on 4 September 2007 that Apotex Australia could not achieve a PBS listing until 1 April 2008.[359] The second development occurred on 21 September 2007 when Gyles J published his reasons for granting the interlocutory injunction and confirmed that a final hearing in the revocation proceedings would commence on 28 April 2008.[360]
[358]Sanofi (No 5) (2020) 151 IPR 237 at 295 [278].
[359]Sanofi (No 5) (2020) 151 IPR 237 at 295 [279].
[360]Sanofi (No 5) (2020) 151 IPR 237 at 296 [281].
Ultimately, the primary judge concluded that "[i]n the absence of evidence from Dr Sherman, I am not persuaded that he would have authorised a launch at risk in circumstances where an interlocutory injunction had been refused, but a final hearing was fixed to commence on 28 April 2008".[361]
[361]Sanofi (No 5) (2020) 151 IPR 237 at 297 [286].
The primary judge also made reference to the circumstance that in 2008 and 2009 Apotex Australia did not seek to list and launch at risk,[362] as bearing on whether it would have done so in September 2007 had the application for an injunction been refused by Gyles J. His Honour noted that Apotex Australia had prepared revised financial risk and reward analyses in July 2008 and September 2009 that showed a much-reduced potential upside and substantially increased financial downside from a launch at risk.[363] In particular, the revised estimate of Apotex Australia's financial exposure to Sanofi if it launched at risk and the patent was held valid was around $166 million in July 2008[364] and $650 million in September 2009.[365]
[362]Sanofi (No 5) (2020) 151 IPR 237 at 304 [325].
[363]Sanofi (No 5) (2020) 151 IPR 237 at 299 [294]-[296], 301 [310].
[364]Sanofi (No 5) (2020) 151 IPR 237 at 299 [296].
[365] Sanofi (No 5) (2020) 151 IPR 237 at 301 [311].
However, in the end result, the primary judge drew little support from the events of 2008 and 2009 for the overall conclusion that the Commonwealth failed to discharge its onus of proof. His Honour merely concluded that the financial analyses and "Apotex Canada's ultimate response to them tend[ed] to contradict the assertion made in Mr Millichamp's oral evidence that Apotex [Australia] trie[d] to get on the market as soon as possible".[366] In any event, I agree with Jagot J's analysis of the lack of utility of the events of 2008 and 2009 to an assessment as to what Apotex Australia would have done had the injunction been refused.[367]
[366]Sanofi (No 5) (2020) 151 IPR 237 at 303 [322].
[367]See reasons of Jagot J at [316]-[325].
The statements made to Gyles J in 2007
It is necessary to address the evidential effect of the statements made on behalf of Apotex Australia to Gyles J in 2007. Both the primary judge and the Full Court failed to address their significance.
Before the primary judge the Commonwealth relied on Mr Catterns' exchange with Gyles J in which he unequivocally stated that, if not restrained by an injunction, Apotex Australia intended to list and launch its clopidogrel products at risk from 1 April 2008.[368] That statement was supported by Mr Millichamp's affidavit sworn on 17 September 2007.
[368]Sanofi (No 5) (2020) 151 IPR 237 at 256 [84]-[85].
Both the primary judge and the Full Court dealt with that reliance in part by pointing out that, while Mr Millichamp wished to launch at risk if the injunction application by Sanofi was refused, the real question was whether Dr Sherman would have decided to launch at risk after that refusal.[369] On that basis, the Full Court rejected the Commonwealth's submission that the primary judge's reasoning was flawed because it was never put to Mr Millichamp that the assertion in his affidavit sworn on 17 September 2007 that Apotex Australia would launch at risk if the injunction was refused was false.[370]
[369]Sanofi (No 5) (2020) 151 IPR 237 at 290 [251]; Sanofi FFC (2023) 411 ALR 315 at 380-381 [301].
[370]Sanofi FFC (2023) 411 ALR 315 at 379-381 [296]-[302].
The reasoning of the primary judge and the Full Court concerning the statements made during the injunction hearing before Gyles J rests in part on the edifice created from Mr Millichamp's email of 27 June 2007 to the effect that Dr Sherman's further approval was required to list and launch. Even so, the reasoning of the primary judge and the Full Court did not address how, in the face of the unequivocal statements that were made to Gyles J and the offer to provide security, Dr Sherman could have decided not to launch (or not approve a launch) if an injunction was not granted.
The hypothetical context in which Dr Sherman would have had to make any decision about whether or not to launch at risk if the application for an interlocutory injunction had been refused was one in which Apotex Australia, via its managing director and senior counsel, would have already told Gyles J in emphatic terms that it would list and launch at risk. If the injunction was refused, and then for some reason Dr Sherman decided not to launch, what would have been the fate of Apotex Australia's undertaking to the Federal Court to provide security of $50 million for Sanofi's damages claim (and costs)? Apotex Australia could not have assumed that it would be relieved of that undertaking simply because Sanofi would no longer incur losses from Apotex Australia having launched its clopidogrel products on the market. Instead, Apotex Australia would have had to apply to the Court to be relieved from its undertaking. Absent a compelling change of circumstances justifying a change of intention, on that application, Apotex Australia would have had to embark on the potentially excruciating and perilous task of explaining why its earlier statements about its intentions were "overstated" (if not outright false).
The Full Court were dismissive of the Commonwealth's reliance on Apotex Australia's proffering of the undertaking to provide security of $50 million. Their Honours noted that there was no evidence about the level of financial commitment required of Apotex Australia to provide the security and observed that it was "entirely possible as a matter of logic for Apotex [Australia] to have been willing to proffer the undertaking to provide the security and, as yet, not to have made a final decision as to whether it was going to launch".[371]
[371]Sanofi FFC (2023) 411 ALR 315 at 364 [205].
If the Full Court's reference to a "matter of logic" means consideration in isolation, then that may be correct, although whatever the cost of the security to Apotex Australia, it was, as the Full Court conceded, "not a small step".[372] However, Apotex Australia's offer of security is not to be considered in isolation. If Apotex Australia had abandoned its stated intention to launch at risk, but proffered the security, the company and its managing director would still have been exposed to an allegation that they had misled Gyles J about the company's intentions. No doubt Gyles J conducted directions hearings in the lead up to the final hearing of the revocation proceedings in April 2008. It is inevitable that his Honour would have been informed if Apotex Australia had not sought PBS listing or launched at risk as it said it would.
[372]Sanofi FFC (2023) 411 ALR 315 at 364 [204].
Further, any attempt by Dr Sherman to cause Apotex Australia to abandon the stated intention to launch at risk in the event that the injunction was refused without some compelling change of circumstances justifying that course would have most likely required Mr Catterns and the rest of Apotex Australia's legal representatives to cease acting on Apotex Australia's behalf. On that scenario, it might have appeared that they had been party to misleading statements made to Gyles J as to their client's intentions. Any attempt by Apotex Australia to recant could have invited scrutiny as to the instructions that had previously been given to its legal representatives and the advice the legal representatives had provided.
If an injunction had been refused, then Apotex Australia and its managing director, Mr Millichamp, would have already committed to listing its clopidogrel products on the PBS and launching at risk. If, absent some change in circumstances justifying an abandoning of that intention, Dr Sherman had decided to cause Apotex Australia not to list and launch at risk, he would have placed his Australian operations team including Mr Millichamp in significant peril and severely disrupted the application to revoke Sanofi's patent.
Otherwise, when considered in light of the emphatic statements made to Gyles J on behalf of Apotex Australia about its intention to list and launch, neither of the two points identified by the primary judge as leading to Dr Sherman concluding that it was preferable not to launch if an injunction was refused have any force. As noted, by no later than 14 September 2007, Dr Sherman had been advised of the revised date of the proposed PBS listing.[373] The entire premise of the hearing before Gyles J was that the revised proposed list and launch date was 1 April 2008. Further, the early hearing date that his Honour announced when granting the injunction had already been foreshadowed in Mr Millichamp's email of 13 September 2007 to Mr Kay. Any suggestion that Mr Kay would not have passed that information onto Dr Sherman is risible.
[373]Sanofi (No 5) (2020) 151 IPR 237 at 295 [279]-[280].
For the sake of completeness, it should be noted that there is no evidence that Mr Millichamp's evidence did not represent his understanding of Apotex Australia's intentions or that Mr Catterns' statements to Gyles J did not genuinely represent his instructions.
The email of 26 June 2007 and Jones v Dunkel
In addressing the effect of the documents concerning Apotex Australia's intentions up to the time the injunction was sought by Sanofi, the primary judge did not accept that the email of 20 February 2007 was an instruction that provided Mr Millichamp with sufficient authority to launch at risk in late 2007 without reverting to Dr Sherman, or that the email was "persuasive evidence" of what Dr Sherman's thought process would have been "eight or nine months later" if the injunction was refused.[374] This latter finding built on the primary judge's interpretation of the email of 26 June 2007 noted above.[375]
[374]Sanofi (No 5) (2020) 151 IPR 237 at 307 [340]-[341].
[375]See above at [374].
From that premise, the primary judge concluded that Dr Sherman was a witness whom it was expected that the Commonwealth would have called and that justified drawing an inference of the kind referred to in Jones v Dunkel,[376] namely "that the Commonwealth chose not to call [Dr Sherman] because it considered that his evidence would not have assisted its case".[377] The primary judge then reasoned as follows:[378]
"I am not prepared to infer, based on the 20 February 2007 email, or any of the subsequent correspondence in evidence which was said to justify the drawing of such an inference, that Dr Sherman was likely to have instructed Mr Millichamp to procure the listing of Apotex [Australia's] clopidogrel products with effect from 1 April 2008.
In my opinion, the Commonwealth’s case suffers from an evidentiary deficiency which cannot be made good by drawing inferences from correspondence written by Dr Sherman in the lead up to the hearing of the interlocutory application. In particular, I do not think it can be inferred that if Dr Sherman had known that the trial of the patent proceeding would commence in the same month that Apotex Australia obtained a PBS listing of its clopidogrel products (triggering a 12.5% statutory price reduction), that he would have, in those circumstances, authorised Apotex Australia to obtain such a listing before judgment was delivered or, at least, until the trial had concluded (by which time he and his colleagues and his legal advisers may have had a clearer view of the strength of Sanofi's case)."
[376](1959) 101 CLR 298.
[377]Sanofi No 5 (2020) 151 IPR 237 at 308 [345]-[347].
[378]Sanofi No 5 (2020) 151 IPR 237 at 308-309 [348]-[349].
The difficulty with the second paragraph of the above extract has already been identified, namely that, prior to the hearing of the application for an interlocutory injunction, Dr Sherman was apprised of both the likely date of the final hearing of the revocation proceedings and the revised likely PBS listing date, yet Apotex Australia proceeded to fight the injunction and tell Gyles J of its intention to list and launch at risk regardless. There was no "evidentiary deficiency" as described. Both the primary judge and the Full Court erred in concluding otherwise.[379]
[379]Sanofi FFC (2023) 411 ALR 315 at 392 [355].
Further, these paragraphs purport to apply Jones v Dunkel in the manner explained by Glass JA in Payne v Parker,[380] namely that the failure by a party who bears the legal onus of proof to call a witness whom it is expected they would have called may result in the inferences for which they contend being treated with greater reserve.[381] The Commonwealth carried the legal onus of proof and, as noted, the primary judge found that it was expected that it would have called Dr Sherman.[382]
[380](1976) 1 NSWLR 191.
[381]Payne v Parker (1976) 1 NSWLR 191 at 200-201.
[382]Sanofi (No 5) (2020) 151 IPR 237 at 308 [345]-[347].
However, the approach of the primary judge as seen in the above passage, and that of the Full Court, misstated the Commonwealth's case. The Commonwealth did not seek to prove that, had the injunction been refused, Dr Sherman was likely to have given fresh instructions to Mr Millichamp to procure the listing of Apotex Australia's clopidogrel products with effect from 1 April 2008. Instead, the Commonwealth's case was that, prior to the hearing before Gyles J, Apotex Australia was unequivocally committed to listing and launching at risk and, to the extent that depended on a decision by Dr Sherman, he had already made it. To the extent that the Commonwealth's case involved the drawing of an inference about what Dr Sherman would have decided if the application for an interlocutory injunction had been refused, it was only that there was no proper basis for concluding that he would have caused Apotex Australia to recant what it told Gyles J. The constraints on him doing so have already been addressed.[383]
[383]See above at [379]-[387].
As noted, the Commonwealth's case deployed direct evidence of Apotex Australia's intentions immediately prior to the grant of the interlocutory injunction, being the statement made to Gyles J by Mr Catterns and Mr Millichamp's affidavit. In submissions before the primary judge, the only specific inference that the Commonwealth submitted should be drawn was that, in the emails sent by Dr Sherman at 4.44 am and at 5.12 am on 27 June 2007, he reiterated the instructions he gave on 20 February 2007 to launch at risk unless restrained. The absence of Dr Sherman from the witness box could not justify refusing to draw that inference because the undisputed claim for privilege over the redacted portion of Dr Sherman's emails meant that no witness could be asked to give direct evidence of their contents; ie, there was no (admissible) evidence about those emails that Dr Sherman could elucidate.[384]
[384]cf Payne v Parker (1976) 1 NSWLR 191 at 202.
The Commonwealth's submission about the contents of Dr Sherman's emails sent on 27 June 2007 was never expressly addressed by the primary judge. The Full Court rejected the Commonwealth's complaint about that failure by reasoning that the submission was just a recitation of the Commonwealth's case that Dr Sherman had instructed Apotex Australia to launch at risk and that the primary judge had addressed that submission below.[385] However, that reasoning mischaracterises the Commonwealth's submission which, as noted, concerned the drawing of a particular inference about the contents of certain emails. Thus, in the end result, an important submission made by the Commonwealth was not addressed at first instance or on appeal.
[385]Sanofi FFC (2023) 411 ALR 315 at 383 [316].
In fact, the Commonwealth's submission had great force. In particular, the Commonwealth contended that an inference about the contents of Dr Sherman's emails sent on 27 June 2007 should be drawn from three of the emails sent in the immediate period afterwards, which have been described above,[386] namely: the email from Mr Millichamp to Mr Haas at 1.59 pm on 27 June 2007 that said "we will plan to launch subject to Barry's further advice / approval"; the email from Mr Millichamp to executives of Apotex Australia at 11.23 am on 27 June 2007 that passed on Dr Sherman's redacted email, and which said "[g]ame on"; and the email sent by Mr Millichamp to Mr Haas and copied to others at 10.28 pm on 28 June 2007 which said "as per instructions from Barry" and provided a list of objectives detailing the "plan" for Apotex Australia's clopidogrel products, with the third point stating "[i]f we are successful in defending our position vs Sanofi and an injunction is not granted by the courts then we will launch".
[386]See above at [359]-[360].
The second email in which Mr Millichamp said "[g]ame on" was noted by the primary judge, but its contents were not engaged with.[387] The Full Court addressed that email by identifying two possibilities as to what was meant by the "game". The first possibility identified by the Full Court was to launch at risk. The second possibility identified by the Full Court was "to signal to the market that Apotex [Australia] was going to launch in order to goad Sanofi into seeking an interlocutory injunction and proffering an undertaking as to damages". The Full Court added that "[w]hich of these was the 'game' to which Mr Millichamp was referring rather turns on the contents of Dr Sherman’s two emails which are unknown".[388]
[387]Sanofi (No 5) (2020) 151 IPR 237 at 289 [245].
[388]Sanofi FFC (2023) 411 ALR 315 at 345 [129].
There are three difficulties with the Full Court's analysis of the reference to "game" in Mr Millichamp's email. First, the word "game" was coined by Mr Millichamp and his email was not redacted. It was never suggested to Mr Millichamp that his intention was to "goad" Sanofi into proffering an undertaking as to damages without genuinely intending to resist the injunction and launch at risk if an injunction was not granted.[389] Second, if the "game" was to "goad" Sanofi into proffering an undertaking as to damages, then that object was achieved by no later than 17 September 2007 when such an undertaking was proffered by Sanofi (although no doubt from the outset, all the parties envisaged it would be required as the price of Sanofi obtaining an injunction). Despite that offer, Apotex Australia continued to vigorously resist Sanofi's application for an injunction. Third, the possibility that Sanofi was being goaded disregards the unequivocal statements made by Apotex Australia to Gyles J as to its intentions. Goading a commercial rival in correspondence is one thing. Deliberately misleading a court is a very different thing. Once that possibility of goading is removed, as it must be, the Full Court's reasoning bolsters the drawing of the particular inference sought by the Commonwealth at trial.
[389]See reasons of Jagot J at [305].
Despite being set out verbatim in the Commonwealth's written submissions, the third email it relied on, being the email from Mr Millichamp in which he referred to "as per instructions from Barry", was not referred to at all by the primary judge. The Full Court found it was not necessary for the primary judge to do so "once the full scope of the trial judge's reasoning [was] grasped".[390] This was a reference to the primary judge's reasoning that, while Mr Millichamp was enthusiastic to launch, that was no answer to the "proposition that Dr Sherman's final approval before a launch would be necessary".[391] However, that reasoning failed to address the point being made by the Commonwealth in its submission, namely that, when considered in context, the opening words to Mr Millichamp's email suggested that he was passing on an instruction from Dr Sherman that was contained in the redacted emails sent on 27 June 2007.
[390]Sanofi FFC (2023) 411 ALR 315 at 383 [314].
[391]Sanofi FFC (2023) 411 ALR 315 at 349 [141].
Instead, as noted, from the first of the emails that the Commonwealth relied, the primary judge extracted the suggestion that any approval given by Dr Sherman was provisional and had to be confirmed. That conclusion failed to address the context in which the email was sent. As the Commonwealth's submission suggested, that context strongly supported the contention that Dr Sherman had reiterated the intention to launch ("[g]ame on") and had not qualified the intention to launch.
Lastly, the inference sought to be drawn by the Commonwealth about those emails was not undermined by Mr Millichamp's oral evidence before the primary judge when he was asked about the source of his instructions for the "plan" referred to in his email to Mr Haas on 28 June 2007 ("as per instructions from Barry the plan"). In response to this question, Mr Millichamp said that "[u]nless there were any interim instructions, which I can't remember, I would be referring to the original ones [from 20 Feb 2007], yes". As explained by Jagot J,[392] much was made of this by the primary judge[393] and the Full Court.[394] However, this evidence could not detract from the Commonwealth's case, and that is not just because Mr Millichamp was giving evidence in 2017 about events that took place in 2007.[395] The redactions for privilege meant Mr Millichamp could not be shown the very emails the Commonwealth contended contained the instructions given by Dr Sherman. As already noted, neither Mr Millichamp nor anyone else, including Dr Sherman, could give direct evidence of their contents (unless privilege was waived by Apotex Australia).
[392]See reasons of Jagot J at [282]-[284].
[393]Sanofi (No 5) (2020) 151 IPR 237 at 289 [248], 295 [277], 308 [348].
[394]Sanofi FFC (2023) 411 ALR 315 at 388 [340].
[395]See reasons of Jagot J at [285].
Thus, in addressing the period up to the hearing of the injunction, the primary judge failed to properly address the Commonwealth's case and overlooked cogent evidence concerning Apotex Australia's intention to list and launch at risk if not restrained. The Full Court similarly erred in dismissing the Commonwealth's complaints about his Honour's fact finding concerning this period.
Compounding this failure was the approach adopted by both the primary judge[396] and the Full Court[397] to the circular of 17 August 2007. When the reference to "the decision whether to launch ... will be delayed until the outcome" of the injunction application is known is read with the balance of the document, especially the early statement of, "[w]e intend to launch", then the circular is not evidence of a lack of a firm intention to launch at risk. It simply reflects the commercial reality that the outcome of the injunction application and what occurred during the application would, or at least could, affect Apotex Australia's launch of its clopidogrel products.
[396]Sanofi (No 5) (2020) 151 IPR 237 at 297 [288].
[397]Sanofi FFC (2023) 411 ALR 315 at 342 [118].
In the end result, the inference sought by the Commonwealth about the instructions given by Dr Sherman in his emails of 27 June 2007 should be drawn. The formation of that intention at that time did not exclude Dr Sherman revisiting the issue or later confirming it. However, by late June 2007 and throughout July and August 2007, it was "[g]ame on" as far as Apotex Australia was concerned.
Further, even if the particular inference the Commonwealth contended about the contents of Dr Sherman's emails of 27 June 2007 was not drawn, and even if Mr Millichamp's email of 27 June 2007 was capable of raising some doubt at that time about the firmness of Apotex Australia's intention to seek listing and launch if an injunction was refused, then that did not obviate the necessity to consider what was demonstrated by the totality of the Commonwealth's evidence concerning Apotex Australia's intentions up until the grant of the interlocutory injunction by Gyles J. That evidence demonstrated that throughout 2007 Apotex Australia formed an intention to list its clopidogrel products on the PBS and launch those products at risk unless restrained by an injunction. It culminated in Apotex Australia unequivocally communicating that intention to Gyles J. Until that occurred, it was undoubtedly open to Dr Sherman to change course. However, for the reasons set out above, his scope to do so after the statements were made to Gyles J was very much narrowed, if not removed entirely.
No inference adverse to the Commonwealth can be drawn
As noted, relying on Jones v Dunkel and Payne v Parker, the primary judge declined to draw an inference that the Commonwealth did not seek, namely that, had no injunction been granted, Dr Sherman was likely to have instructed Mr Millichamp to procure the listing of Apotex Australia's clopidogrel products with effect from 1 April 2008.[398] The Full Court adopted the same approach in rejecting the Commonwealth's criticism of the primary judge's reliance on Jones v Dunkel. The Full Court observed that "Dr Sherman's evidence would have undoubtedly elucidated the central issue in this case: what would Dr Sherman have done if the injunction had been refused?".[399]
[398]Sanofi (No 5) (2020) 151 IPR 237 at 308 [348].
[399]Sanofi FFC (2023) 411 ALR 315 at 394 [364].
However, that was not the central issue. The central issue was whether Apotex Australia would have listed and launched its clopidogrel products at risk if the injunction had been refused? It is true that Dr Sherman was its directing mind, but Apotex Australia had already committed itself to listing and launching at risk by telling Gyles J that it would do so. Even though the statements made concerned Apotex Australia's future intentions, the fact they were made to a court meant that they could not be withdrawn without good reason. Like the company minutes considered in Australia Securities and Investments Commission v Hellicar ("Hellicar"), the evidence of the statements made to Gyles J were an "exact proof",[400] and, save for the specific inference sought about the contents of the email from Dr Sherman of 27 June 2007, so much of the Commonwealth's case that contended that Apotex Australia had the requisite intention just prior to the grant of the injunction did not depend on inferences, "let alone on 'uncertain inferences'".[401] There was no scope for any application of Jones v Dunkel or any analogous principle to detract from the evidentiary force of the evidence of the statements made to Gyles J.
[400](2012) 247 CLR 345 at 445 [257].
[401]Australian Securities and Investments Commission v Hellicar ("Hellicar") (2012) 247 CLR 345 at 413 [169].
As for the counterfactual period after the injunction was hypothetically refused, even if the preconditions to the drawing of a Jones v Dunkel inference by reason of the Commonwealth's failure to call Dr Sherman were otherwise established, the only inference that could have been drawn was that his evidence would not have assisted the Commonwealth.[402] In light of what Gyles J was told about Apotex Australia's intentions, the passage of time between 2007 and the hearing before the primary judge and the counterfactual nature of the evidence sought to be elicited, such an inference would take the matter nowhere. It would be no different to Dr Sherman giving evidence to the effect that, without the benefit of hindsight, he could not remember or reconstruct what he would have done.[403]
[402]Hellicar (2012) 247 CLR 345 at 432 [232]; Jones v Dunkel (1959) 101 CLR 298 at 308.
[403]See Hellicar (2012) 247 CLR 345 at 440-441 [249].
In any event, the absence of Dr Sherman could not found an inference that was adverse to the Commonwealth's case.[404] In particular, his absence could not be used to support a finding that he would have instructed Apotex Australia to recant what it told Gyles J and abandon its stated intention to launch. Like the absent witness, Mr Robb, considered in Hellicar, there is no basis for concluding that it was likely that, if called, Dr Sherman might have either disowned Mr Millichamp's and Mr Catterns' statements to Gyles J or provided some plausible basis upon which Apotex Australia could have abandoned its stated intention to launch at risk without attracting any sanction for doing so.[405] Without evidence of that kind, the Commonwealth was entitled to succeed on this part of its case.
[404]Hellicar (2012) 247 CLR 345 at 413 [168], 432 [232].
[405]Hellicar (2012) 247 CLR 345 at 413 [168].
Conclusion
Neither the primary judge nor the Full Court properly addressed the Commonwealth's case. To the extent that "concurrent" factual findings were made that were materially adverse to the Commonwealth's case, the standard of review for each has been emphatically met in that there was both "clear error" as well as a "plain injustice"[406] to the Commonwealth in that its case was not addressed on its merits. The Commonwealth overwhelmingly demonstrated that, had the injunction been refused, Apotex Australia would have sought and obtained a PBS listing of its clopidogrel products with effect from 1 April 2008 and launched at risk. Ground 2 of the Commonwealth's appeal should be upheld. For the reasons given by Jagot J, Sanofi's notice of contention should be rejected.
[406]Louth v Diprose (1992) 175 CLR 621 at 633-634.
The orders proposed by Jagot J should be made.
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