Eli Lilly & Company v Novo Nordisk A/S
[1999] APO 45
•2 August 1999
OFFICIAL NOTICE
DECISION OF A DEPUTY COMMISSIONER OF PATENTS
Patent Application : 694501 in the name of ELI LILLY & COMPANY
Title: Insulin Analog Formulations
Action: Opposition by Novo Nordisk A/S, and lawful excuse for not complying with a Notice requiring production of certain documents.
Decision: Issued .
Abstract
A Notice required production of documents relating to an alleged prior use of the invention. The applicant conceded that they had used a substance falling within the scope of the claims, well before the priority date, in clinical trials. The opponent sought production of all documents relating to the trials. The applicant claimed lawful excuse on the basis of commercial confidentiality, and for being pre-emptive of the applicant’s defence.
It would be inappropriately to afford the applicant greater protection from accusations of prior use merely because the prior use is alleged to have been performed by themselves.
The mere fact that material is confidential does not constitute a lawful excuse for not producing documents. On the other hand, it is not appropriate for the Commissioner to require production of confidential material merely because it is collateral to the material that is properly relevant.
Given the admissions of prior use before the priority date, the Commissioner has an obligation to be satisfied that such prior use did not render the patent void for want of novelty. Since the applicant has possession of the relevant material, there is an onus on the applicant to be forthcoming with material relevant to the clinical trials – in so far as it relates to the issue of prior use under the Patents Act
Applicant required to comply with a modified form of the Notice.
PATENTS ACT 1990
DECISION OF A DEPUTY COMMISSIONER OF PATENTS
Re:Patent Application 694501 in the name of Eli Lilly & Company, opposition by Novo Nordisk A/S, and lawful excuse for not complying with a Notice requiring production of certain documents.
BACKGROUND
Novo Nordisk A/S (Novo) has opposed patent application 694501 by Eli Lilly & Company (Lilly). The application relates to a human insulin analogue. At this time, Novo has served its statement of grounds and particulars, but has not yet served any evidence in its opposition. One of the grounds of opposition relates to an alleged prior use of the invention as part of clinical trials.
On 6 April 1999, the Commissioner issued (on the request of Novo) a Notice Requiring Production of a Document or Article identifying the following:
The Protocol for any Phase III clinical trials carried out in Australia in respect of the insulin analogue sold and promoted in Australia under the trade name “Humalog”
Master labelling showing the label texts of the vials and the packs used in the Phase III clinical trials referred to in point 1.
One example of a Master Patient Information and Informed Consent Form used in the Phase III clinical trials referred to in point 1.
Agreement on the Protocol between the investigators carrying out the Phase III clinical trials referred to in point 1 and Eli Lilly and Company.
Reports of the Phase III chemical (sic clinical) trials referred to in point 1 prepared by the investigators of these trials.
Lilly claimed lawful excuse for not producing any documents the subject of the Notice. The basis of their claim to lawful excuse related to the commercially confidential nature of the documents, and lack of relevance.
A hearing was held in Canberra on 9 June 1999. Lilly was represented by Dr A. Bennett of counsel, instructed by Dr W. Pickering (patent attorney of F.B. Rice & Co.) Novo was represented by Mr G. Clarke of counsel, instructed by Mr C Schlicht (patent attorney of Phillips Ormonde & Fitzpatrick).
Before the conclusion of the hearing, Lilly agreed to produce documents in accordance with items 2 to 4 (there being an understanding that item 4 related to the agreements per se, and did not include the protocols), as well as the formulation(s) of Humalog as used in those trials. I shall therefore say no more about items 2 to 4.
With regard to the allegation of prior use, Lilly conceded that:
the Humalog used in the clinical trials is within the scope of the claims of the patent application; and
trials occurred before the earliest priority date of the application – and indeed more than 12 months before the earliest priority date (which is relevant having regard to the period specified in Reg 2.2(2)(d) in relation to reasonable trials of an invention in public.)
SUBMISSIONS
Although the hearing lasted many hours, the ultimate issues in dispute are quite brief. The submissions of Mr Clarke may be summarised as:
Novo has good reason to believe the invention was used by Lilly in clinical trials before the priority date;
That use may have been public use of the invention – through failure to ensure comprehensive confidentiality agreements;
The opponent requires access to all documents relating to the clinical trials, so that a full investigation of the circumstances of the prior use can reveal whether or not there was public prior use – including, for example, what was known by the participants, and whether they were restricted in what they could disclose to others.
In any event, following Stack & Anor v Commissioner of Patents (1999) AIPC ¶91-469, relevance was not relevant once the Notice was issued; and
Lilly did not 'oppose' the issue of the Notice when it was issued, and therefore should comply with it.
The submissions of Dr Bennett may be summarised as:
Novo is a commercial competitor of Lilly. The documents contain information that would be extremely valuable to a commercial competitor. Under court procedure, a party that breaches confidentiality imposed by the Court can be subjected to severe penalties; there are no penalties under the Patents Act for breaches of confidence. Accordingly, since the documents cannot be accorded the same level of confidentiality as before the court, and having regard to their commercial sensitivity, there is a lawful excuse for not producing the documents;
The request is no more than a 'fishing' exercise by Novo to ascertain whether it in fact had a case, and to discover Lilly's case;
In any event, the requirement to produce documents should be circumscribed by the case being put in the statement of grounds and particulars. The statement alleges use of the invention before the priority date. That much is conceded by Lilly, and that concession should be a full response to the Notice. To the extent that the documents are sought to investigate the issues of confidentiality – confidentiality is not an issue identified in the statement and there is therefore no basis to require production. And to the extent that confidentiality might be an answer to the allegation of prior use, it can only arise if the applicant chooses to raise it in its evidence in answer. A Notice of production should not be used to pre-empt a defence that might be made. Consequently the documents are not relevant.
The decision in Stack & Anor v Commissioner of Patents (1999) AIPC ¶91-469 does not remove relevance as a ground of lawful excuse.
In short, this decision fundamentally concerns the desire of the opponent to have access to all material that might support its case, and the contrary desire of the patent applicant to preserve commercial confidentiality in the results obtained from the clinical trials.
DECISION
Availability of ‘Relevance’ as a Lawful Excuse
Mr Clarke argued that since Lilly did not object to the Notice prior to it being issued, it was not open for them to argue against the Notice now.
The practice of the Commissioner in dealing with a request to issue a Notice Requiring Production is that she will consider ex parte whether a requested notice has adjectival relevance. Unless adjectival relevance is clearly lacking, the Notice will be issued – with the expectation that any issues of lack of relevance will be dealt with as a matter of as lawful excuse for non-compliance with the Notice.
In this context it is also appropriate to observe that the Commissioner is not obliged to hear the person on whom the Notice is to be served, prior to its issuance. See Sixth Ravani Pty Ltd v FCT 6 FCR 356, where Northrop J observed:
"The power conferred …. is a power to investigate, a power which in many respects is inquisitorial in nature. The Deputy Commissioner is seeking information and the production of documents. The person to whom the notice is given must, in the absence of lawful excuse, comply with the requirements of the notice. If he does not, he commits a criminal offence. In this context, it is difficult to see how the law could imply the necessity for the Deputy Commissioner to comply with the requirements of natural justice before issuing and serving the notice."
Accordingly no inference can be drawn from the absence of any objection by Lilly at the time of issuing the Notice.
Additionally, I was referred to the last few lines of para 24 in the decision of Stack & Anor v Commissioner of Patents (1999) AIPC ¶91-469, which state:
“It is clearly the case that relevance, including adjectival relevance, has to be considered at the time when deciding whether to issue the summons. It is not the case that relevance does not arise until the documents have been produced. Relevance is not the test of whether leave to inspect the documents should be granted.”
Referring to this text, Mr Clarke argued that, the Notice having issued, relevance was no longer an issue. Dr Bennett argued that this decision did not detract from relevance being an issue for lawful excuse.
The context of this decision was the appellant’s assertion that relevance was not an issue concerning whether a Notice should be issued; rather it was only an issue relating to inspection of documents after they had been produced – a proposition rejected by Spender J. The very last sentence, which was the subject of the debate before me, appears to be directed to the specific assertions of the appellant. It refers to the criteria for inspection of the documents once they have been produced – not to whether or not documents should be produced. That is, this decision does not detract from lack of relevance being a ground of lawful excuse.
Relevance of the documents sought
The opposition includes an allegation by the opponent of prior use of the compound of the invention by the patent applicant. Indeed, the applicant has conceded there was prior use – but contends (for reasons unknown to me at this time) that such use as did occur would not invalidate the patent.
In dealing with a serious ground of opposition I expect a responsible opponent would endeavour to establish all facts relevant to support that ground of opposition. Indeed, a ground of its opposition that was clearly unsupported by the facts could be said to be frivolous or vexatious – particularly if the opponent has not taken all reasonable steps to establish the relevant facts. To sustain an allegation of prior use, I would think that key facts that would need to be established (beyond the facts of what was actually used) are:
that there was use, in Australia, before the priority date;
that such use fell within the scope of the claims; and
that such use was a public use.
Accordingly, I think it is prima facie appropriate for the opponent to make reasonable investigations to ascertain facts concerning these issues, as part of preparing its case of prior use. In my view, the records of the clinical trials are clearly relevant (at least generally) to the determining the above facts, and are properly subject to production under s.210(c) in the present opposition.
It was also argued that the present notice was not really a notice requiring production, but entailed a ‘fishing expedition’ akin to discovery. I disagree. It may well be true that a large number of documents are involved. However, the context is one where there is admitted ‘prior use’ of the invention. There are clearly valid questions concerning the circumstances of that use – in particular, whether there was a public use. It is a plausible possibility that some such use entailed public use, and the records of the patentee are likely to be the most relevant source of that information. I do not think it necessary, in the circumstances of admitted or established use of the invention before the priority date, that the opponent must allege a particular public use, with production being circumscribed to that particular use. Rather I think that documents relating to any trials of the invention prior to the priority date that, plausibly could have entailed public use, are relevant.
Pre-empting the applicant’s defence
Dr Bennett argued that they should not have to produce the documents because:
Production should be limited to issues identified in the statement;
The statement of grounds and particulars is limited to alleging prior use; it makes no reference to confidentiality issues;
The applicant has conceded that they ‘used’ a substance falling within the scope of the claims, and that the use occurred before the earliest priority date;
The applicant’s concession gives a full response to the matters raised in the statement; and
How the applicant responds to the allegation of prior use is a matter for its evidence-in-answer. It would be a denial of natural justice for production to pre-empt a defence that the applicant may wish to raise.
I think the issue of what defence the patent applicant might raise is not per se relevant to lawful excuse. Clearly, if the documents were the subject of legal professional privilege there is a lawful excuse for not producing them – unless or until the applicant waived such privilege. But such privilege is not claimed (nor, having regard to how the documents came into existence, apparently available.) Other than on this basis, I fail to see any reason why a lawful excuse arises merely because the Notice is served on a party to proceedings – the more so in the case of a patent applicant, who is seeking to obtain monopoly rights. If there has in fact been a prior use of the invention, validity of the patent does not depend upon who prior used it. It would be inappropriate to afford the applicant greater protection from accusations of prior use merely because the prior use is alleged to have been performed by themselves.
A further matter arises from the nature of an allegation of prior use. By its nature, evidence relating to prior use may only be in the possession of the person who conducted the prior use. Where the patent applicant is the alleged prior user, I consider it inappropriate for the applicant to deny access to material relevant to the prior use, and then assert that the opponent has not made out its case.
For these reasons I do not consider the allegation, that the production might pre-empt Lilly’s defence, as constituting a lawful excuse for not complying with the Notice.
Confidentiality / Scope of the Notice
Mr Clarke (for Novo) argued that the Commissioner should require the production of all documentation relating to the trials. Lilly resisted this on the basis that the documents contain highly valuable commercially confidential material, and expressed concerns about the ability of the Commissioner to enforce confidentiality in the documents. Novo acknowledged that the documents would contain confidential material. To address this, they argued that all the documents should still be produced, but only be available for inspection by Novo’s legal advisers. Further, they suggested that Lilly could indicate which documents were relevant – and to the extent that Novo wanted to look at other documents, the Commissioner could arbitrate on whether inspection should be allowed. [I note here that it was common ground that any inspection of the documents should be restricted to legal advisers.]
I am mindful of the statutory regime under which the Commissioner operates. In particular, the Commissioner exercises administrative powers, and has no powers of enforcement as such. Consequently any breach of undertakings of confidentiality given to the Commissioner cannot be ‘punished’ directly by the Commissioner. But this is not to say that appropriate legal remedies do not exist for such breaches. Moreover, I do not think that the mere fact that material is confidential constitutes a lawful excuse for not producing documents. To do otherwise is to assume that confidentiality cannot be maintained and/or that there will be misconduct on the part of a party’s legal advisers – and generally these are inappropriate assumptions to make. On the other hand, and in recognition of the Commissioner not having direct powers of enforcement, I do not consider it appropriate for the Commissioner to require production of confidential material that is merely collateral to the material that is properly relevant.
Novo argued for all material be produced, but for Lilly to indicate those documents which were relevant. Assuming this to be a sufficient response to the Notice, I think it is quite appropriate for Lilly to identify those documents, or parts of documents, that are relevant – and only supply those documents with appropriate redaction.
But Novo wishes to have all the documents produced, and if they wish to look at documents other than those identified by Lilly, they propose that the Commissioner could act as arbiter. At this time, I do not agree with this approach. Apart from the procedural issues about how one decides which documents Novo’ attorney’s can inspect, I believe that the best person to identify the relevant parts of the material is the applicant. I think I should assume that the applicant would do its best to properly identify the material in the documents that is required to be produced – to provide appropriately redacted documents. Of course, if it becomes apparent that Lilly has been less than forthcoming in the provision of relevant documents, it would be open for the Commissioner to revisit the process of redaction of the documents and/or require the production absent ANY redaction.
Accordingly I think that the documents that should be produced in response to the notice are documents that have been redacted by Lilly so as to relate to the specific issues relating to the ground of prior use in the opposition.
Other matters
It is worth noting here the role of the Commissioner in protecting the public interest. In this case, the patent applicant has conceded that they used the invention before the priority date, in clinical trials. I think the Commissioner has an obligation in such circumstances to be satisfied that such prior use as did occur did not constitute a public prior use of the invention such as to render the patent void for want of novelty. And given the concession, and that the applicant has possession of the relevant material, I consider there to be an onus on the applicant to be forthcoming with material relevant to the clinical trials – in so far as it relates to the issue of prior use under the Patents Act.
In addition, at the hearing I inquired as to the number of persons that participated in the trial – with a view to ascertaining the likely volume of material the subject of the Notice. Dr Bennett was unable to provide an answer. However, I would observe that if a huge number of persons were involved in the trial, there may be a point at which the use in the trial becomes a public use – despite the existence of confidentiality agreements with all participating individuals. [See my comments in Ball Corporation v American National Can Co., unreported decision on 644856, dated 9 Jan 1995, where I stated:
“It may be that a disclosure has been made in confidence to a large number of people; the opponent argued that such situations illustrated their case that confidential disclosures between third parties was sufficient to establish that the information was publicly available – otherwise (they asserted) a person could obtain a patent for something that was well known on a confidential basis by third parties. But in my view I do not need to resolve this issue.”]
If such is the situation in the present case, it is quite relevant to the public interest role of the Commissioner
CONCLUSION
Having regard to all these issues, I consider that generally the applicant has no lawful excuse for not producing documents relating to the clinical trials. However, having regard to the issues of commercial confidentiality surrounding the documents, it is appropriate for the documents to be redacted to matters that relate to the issue of prior use under the Patents Act – and in particular, to any confidentiality agreements that were put in place (or the absence of such agreements), and to what was in fact communicated to the participants in the trials concerning confidentiality, and the substance being trialled.
Accordingly, (and in addition to the agreement reached during the hearing with respect to documents covered by items 2, 3 and 4) I require the applicant to comply with items 1 and 5 of the Notice requiring production dated 6 April 1999. However, the applicant is at liberty to redact those documents relating to the Protocol and reports of the Phase III clinical trials to exclude confidential material that does not relate to the information given to the experimenters and/or patients participating in the trial informing them about the conduct of the trial, the substance being trialled, and any conditions of confidentiality.
In addition, I do not require production of any document in so far as it:
refers or relates to events that occurred after the priority date of 16 June 1994 [recognising that although the entitlement to claim this priority date is challenged by the opponent, a later date is not asserted by the opponent when making the prior use allegation – see para 2(c) of the statement of Grounds and Particulars,]; or
relates to trials, or parts of trials, that were not conducted in Australia.
I allow the applicant 1 month from the date of this decision to produce these documents. Should this time be demonstrably inadequate, I am prepared to allow further time on the understanding that there may be a commensurate need for the opponent to extend the time to serve its evidence in support of the opposition. In addition, either party is at liberty to seek directions varying the above redaction parameters.
Finally, having regard to the nature of the documents, I accept that they are commercially sensitive, and direct [Reg 4.3(2)(b)] that all documents produced in response to this Notice are prescribed documents for the purposes of s.55(2)(a), (b) and (c) of the Act. It also follows that access to those documents will be by way of s.56(1)(b). Issues of access under s.56(1)(b) were not specifically dealt with at this hearing. However, I foreshadow (consistent with Novo's indication that they thought it was appropriate for access to be limited to their legal advisers), that the commercial sensitivity of the documents is such that the Commissioner will likely require undertakings of confidentiality as a condition precedent upon access being granted under s.56(1)(b).
COSTS
Both parties asked for costs to follow the event. Dr Bennett also asked for indemnity costs. In the event, I have found for and against both parties. I think the appropriate outcome is to make no award of cost.
D Herald
Deputy Commissioner of Patents
Patent attorneys for the applicant : F.B. Rice & Co, Melbourne
Patent attorneys for the opponent : Phillips Ormonde & Fitzpatrick, Melbourne
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