Generic Health Pty Ltd v Otsuka Pharmaceutical Co., Ltd
[2013] FCAFC 17
•6 March 2013
FEDERAL COURT OF AUSTRALIA
Generic Health Pty Ltd v Otsuka Pharmaceutical Co., Ltd [2013] FCAFC 17
Citation: Generic Health Pty Ltd v Otsuka Pharmaceutical Co., Ltd [2013] FCAFC 17 Appeal from: Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd [2012] FCA 239 Parties: GENERIC HEALTH PTY LTD (ACN 110 617 859) v OTSUKA PHARMACEUTICAL CO., LTD and BRISTOL-MYERS SQUIBB COMPANY File number: NSD 490 of 2012 Judges: EMMETT, BENNETT AND GREENWOOD JJ Date of judgment: 6 March 2013 Addendum: 8 March 2013 Catchwords: PATENTS – s 117(2)(b) of the Patents Act 1990 (Cth) – whether supplier of product, which was not a staple commercial product, had reason to believe that the person to whom product supplied would put the product to an infringing use
PATENTS – appeal against interlocutory injunction – threatened supply of generic pharmaceutical products – whether prima facie case of infringement – whether prima facie case in a Beecham sense – whether assessment or evaluation of strength of prima facie case required – whether balance of convenience and justice favours the grant of interlocutory injunctive relief
Legislation: Patents Act 1990 (Cth) ss 117(1), 117(2)(a), 117(2)(b), 117(2)(c)
Patents Act 1977 (UK) ss 60(2), 60(3)
Patent Act 1952 (US)Cases cited: Apple Inc v Samsung Electronics Co Limited [2011] HCA Trans 341
Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57
Aktiebolaget Hassle v Alphapharm Pty Limited (2002) 212 CLR 411
Apotex Pty Ltd v Sanofi-Aventis Australia Pty Limited (No 2) (2012) 204 FCR 494
Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621
BeechamGroup Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
Collins v Northern Territory (2007) 161 FCR 549
Grimme Landmaschinenfabrik GmbH & Co KG v Scott [2010] EWCA Civ 1110; (2010) 89 IPR 631
Jackson v Sterling (1987) 162 CLR 612
Jonker v Platform Solutions Pty Limited [2012] FCA 237
KCI Licensing v Smith & Nephew Plc [2010] EWCA Civ 1260; [2010] All ER (D) 203 (Nov).
KCI Licensing v Smith & Nephew Plc [2010] EWHC 1487 (Pat); [2010] FSR 740
Northern Territory v Collins (2008) 235 CLR 619
Samsung Electronics Co Limited v Apple Inc (2011) 286 ALR 257
Sigma Pharmaceuticals (Australia) Pty Limited v Wyeth (2009) 81 IPR 339Date of hearing: 30 July 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 263 Counsel for the applicant: AH Bowne SC with ADB Fox Solicitor for the applicant: Middletons Counsel for the respondents: AJ Bannon SC with C Cochrane Solicitor for the respondents: Allens
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 490 of 2012
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: GENERIC HEALTH PTY LTD (ACN 110 617 859)
ApplicantAND: OTSUKA PHARMACEUTICAL CO., LTD
First RespondentBRISTOL-MYERS SQUIBB COMPANY
Second Respondent
JUDGE:
GREENWOOD J
DATE:
8 MARCH 2013
PLACE:
BRISBANE
ADDENDUM TO REASONS FOR JUDGMENT OF JUSTICE GREENWOOD
In my reasons for judgment published on 6 March 2013, together with the reasons for judgment of Emmett J and the reasons for judgment of Bennett J, I expressed the view at [254] that I respectfully disagreed with the “absolute way” in which Emmett J had expressed a particular principle at [26] in his Honour’s discussion of the principles governing the grant of an interlocutory injunction. I have, since publication, seen the final form of the way in which his Honour has expressed the principle which is now contained within [27] of his Honour’s reasons. Having regard to the formulation of the matter as expressed at [27], I see no point of departure between the views I have expressed at [249] to [259] and the principle identified by his Honour at [27].
I certify that the preceding one (1) numbered paragraph is a true copy of the Addendum to the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate:
Dated: 8 March 2013
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 490 of 2012
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: GENERIC HEALTH PTY LTD (ACN 110 617 859)
Applicant
AND: OTSUKA PHARMACEUTICAL CO., LTD
First RespondentBRISTOL-MYERS SQUIBB COMPANY
Second Respondent
JUDGES:
EMMETT, BENNETT AND GREENWOOD JJ
DATE OF ORDER:
6 MARCH 2013
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Leave to appeal be refused.
2.The applicant pay the respondent’s costs of the application for leave.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 490 of 2012
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: GENERIC HEALTH PTY LTD (ACN 110 617 859)
Applicant
AND: OTSUKA PHARMACEUTICAL CO., LTD
First RespondentBRISTOL-MYERS SQUIBB COMPANY
Second Respondent
JUDGES:
EMMETT, BENNETT AND GREENWOOD JJ
DATE:
6 MARCH 2013
PLACE:
SYDNEY
REASONS FOR JUDGMENT
EMMETT J
INTRODUCTION
Generic Health Pty Limited (Generic Health) seeks leave to appeal from interlocutory orders made by a judge of the Court on 22 March 2012. Interlocutory injunctions were ordered on the basis that the supply of certain products (the GH Products) by Generic Health would involve an infringement of Australian patent number 2005201772 (the Patent) by reason of the operation of s 117(2)(b) of the Patents Act 1990 (Cth) (the Act). The injunctions restrain Generic Health from offering to sell or otherwise dispose of the GH Products, and from importing the GH Products.
The relevant effect of s 117(2)(b) of the Act is that, if a person (the supplier), who supplies a product to another person, has reason to believe that that other person would put the product to a particular use and that that use of the product would infringe a patent, that supply of that product by the supplier is an infringement of the patent by the supplier. Section 117(2)(b) has that effect only on the assumption that the relevant product is not a staple commercial product. For the purpose of the present application, Generic Health accepts that the GH Products are not staple commercial products.
THE PATENT
The first respondent, Otsuka Pharmaceutical Co., Limited (Otsuka), is the holder of the Patent. The title of the Patent is:
Substituted carbostyril derivatives as 5-HT1A receptor subtype agonists.
The complete specification of the Patent (the Specification) describes the invention of the Patent as relating to a method of treating a patient suffering from a disorder of the central nervous system associated with the 5-HT1A receptor subtype, the active ingredient comprising a carbostyril derivative or a salt thereof, known as aripiprazole. The active ingredient of the GH Products is aripiprazole. The second respondent, Bristol-Myers Squibb Company, is licensed to sell products containing aripiprazole in Australia. They are sold under the name Abilify. Abilify products are registered on the Australian Register of Therapeutic Goods (the Register).
The Patent has thirteen claims. For present purposes, the only relevant claim is Claim 7. Claim 7 is a method for treating a patient suffering from certain disorders specified in Claim 7 (the Claim 7 Disorders). The method consists of administering to such patients a therapeutically effective amount of aripiprazole. The Claim 7 Disorders are disorders that:
·consist of cognitive impairment caused by treatment-resistant schizophrenia, inveterate schizophrenia, or chronic schizophrenia; and
·fail to respond to two or more of the anti-psychotic drugs specified in Claim 7 (the Claim 7 Drugs).
The Specification states that typical anti-psychotic drugs are effective in treatments for the positive symptoms of schizophrenia. In contrast to typical anti-psychotic drugs, atypical anti-psychotic drugs are more effective against the negative symptoms and against cognitive impairment symptoms associated with schizophrenia. However, the Specification says that, even though atypical anti-psychotic drugs provide a suitable pharmacotherapy for schizophrenia, certain patients are resistant to the anti-psychotic therapies of such drugs. Such patients may either not respond or may feel more anxious, depressed or experience cognitive dysfunction in response to anti-psychotic therapy. Such treatment-resistant patients pose a problem for a physician in providing an appropriate therapy. The Specification asserts that aripiprazole may prove to be a potent and safer drug therapy for cognitive impairment symptoms caused by treatment-resistant schizophrenia, inveterate schizophrenia and chronic schizophrenia, being symptoms that fail to respond adequately to certain currently available anti-psychotic drugs that are described in the Specification, being the Claim 7 Drugs.
SYMPTOMS AND TREATMENT OF SCHIZOPHRENIA
Schizophrenia is a serious mental disorder that affects 1 per cent of the population worldwide. It generally comes on in early adulthood. Its main features are disturbances in the ability to experience reality, lack of capacity to engage with others in the outside world and disturbances in thinking, behaviour and emotional responses. The symptoms of schizophrenia can be classified into a number of separate categories. Generally, the four main categories are positive symptoms, negative symptoms, cognitive impairment symptoms and mood symptoms. While cognitive impairment symptoms are sometimes said to fall within the category of negative symptoms, cognitive impairment symptoms are also sometimes said to constitute a totally separate category. In any event, cognitive impairment symptoms are recognised as an important category of schizophrenic symptoms.
Cognitive impairment refers to a range of impaired higher cognitive functions. The main manifestations of cognitive impairment are disturbances in attention, memory and executive function. The current view, as reflected in the accepted literature, is that the majority of all patients with schizophrenia suffer from some degree of cognitive impairment.
A distinction is drawn between acute schizophrenia and chronic schizophrenia. Acute schizophrenia is schizophrenia that lasts for at least 6 months, after which the patient recovers. However, acute schizophrenia may relapse from time to time. Chronic schizophrenia lasts significantly longer than 6 months and usually many years. Generally speaking, the symptoms of chronic schizophrenia are negative symptoms and cognitive impairment symptoms. While a patient suffering from chronic schizophrenia may have positive symptoms under control, the negative symptoms often persist. Chronic schizophrenia includes a particularly severe form of schizophrenia known as treatment-resistant schizophrenia. Treatment-resistant schizophrenia is where the patient’s positive symptoms, in addition to negative and cognitive symptoms, are unresponsive to anti-psychotic medication. Of all patients suffering from schizophrenia, 20 per cent are partially unresponsive, and 5 per cent are totally unresponsive, to anti-psychotic medication, so far as positive symptoms are concerned.
Typical anti-psychotic medications were developed first in the 1950s and then further throughout the 1960s. Atypical anti-psychotic medications were discovered in the 1980s. Atypical anti-psychotic medications have fewer side effects than typical anti-psychotic medications and are more widely used in Australia than typical anti-psychotic medications. It is now very rare for a new patient presenting with schizophrenia to be commenced on typical anti-psychotic medications. Most patients who were started on typical anti-psychotic medications would by now have been switched to atypical anti-psychotic medications.
Dopamine is a chemical neurotransmitter that facilitates the transmission of an electrical signal from one nerve cell to another. When released by one neuron, it lodges in a dopamine receptor and stimulates that receptor. Partial dopamine agonism is the tendency to stimulate partially some dopamine receptors. In contrast, dopamine antagonism is the blockage of the dopamine receptor, so that the neurotransmitter role of dopamine is completely blocked. Over-activity of dopamine in some parts of the brain is believed by neuroscientists and psychiatrists to be responsible for the positive symptoms of schizophrenia. Dopamine under-activity in other parts of the brain is one of the theories to explain the negative symptoms of schizophrenia. All anti-psychotic medications have their effects on positive symptoms by blocking dopamine receptors, that is, by being dopamine antagonists. They also have additional effects on a variety of other receptors. Since dopamine depletion is one explanation given for the occurrence of negative symptoms, a drug that has dopamine antagonism activity would, on theoretical grounds, have the effect of worsening negative symptoms and cognitive impairment symptoms. Aripiprazole is a partial dopamine agonist with low intrinsic activity.
Serotonin is another chemical neurotransmitter. It reacts with serotonin receptors. Aripiprazole has partial agonist properties at the 5-HT1A serotonin receptor. That is to say, it has a tendency to stimulate the 5-HT1A serotonin receptor partially.
Professor Bruce Singh, a consultant psychiatrist, gave evidence at the behest of Otsuka. Professor Singh said that, if he were presented with a patient suffering from negative symptoms and cognitive impairment symptoms of schizophrenia, he would, in order to improve that patient’s level of engagement with the outside world by reducing negative symptoms and improving cognitive function, take the following steps:
· treat the patient with an atypical anti-psychotic agent;
·stop the use of any anticholinergic agent, because such agents can impair cognition; and
· consider prescribing aripiprazole.
The reason for considering the prescription of aripiprazole is that there are certain advantages associated with that drug, including the following:
· it is less sedating than other anti-psychotic agents;
·for many patients, it leads to increased energy and movement by the patient;
·it is not an anticholinergic agent and does not have anti-histamine activity and therefore has little propensity to cause weight gain;
·its partial agonist activity at the 5-HT1A receptor may add to its cognitive enhancing properties; and
·it is a partial dopamine agonist and a partial agonist at the 5-HT1A receptor.
Professor Singh said that all clinicians are interested in having drugs with a variety of mechanisms to treat schizophrenia. He would expect that anyone who treats schizophrenia would want a drug with the partial dopamine agonist mechanism or partial agonism at the 5-HT1A receptor as part of his or her repertoire. Professor Singh expressed the opinion that aripiprazole’s partial agonist activity at the 5-HT1A receptor is advantageous because it may contribute to its cognitive enhancing properties. None of the other anti-psychotic medications have the partial dopamine agonism activity that is a characteristic of aripiprazole.
Best practice would suggest that clinicians should always review chronic patients and consider their positive symptoms, negative symptoms and cognitive impairment symptoms, and decide whether an appropriate switch of medication is indicated if the relevant symptoms are not responding. Professor Singh says that aripiprazole is one switching option, which he has used in circumstances where a patient’s negative symptoms or cognitive impairment symptoms have been a major problem. He would consider switching, and has switched, patients to aripiprazole in circumstances where those patients have failed to respond to more than one previously prescribed anti-psychotic medication, including certain of the Claim 7 Drugs.
FINDINGS OF THE PRIMARY JUDGE
The primary judge found, on the evidence before him, that cognitive impairment is a symptom of chronic schizophrenia and treatment-resistant schizophrenia. His Honour also found that there was evidence that aripiprazole can be used for the production of a medication that is effective in the treatment of cognitive impairment caused by schizophrenia. There was no dispute that the active ingredient of the GH Products is aripiprazole. His Honour also found, on the evidence before him, that aripiprazole is used for first and second line treatment as well as later line treatment for patients suffering from schizophrenia. Thus, his Honour found, aripiprazole is used as medication for schizophrenics who fail to respond to anti-psychotic drugs, including Claim 7 Drugs.
As I have said, it is common ground, for the purposes of the application for leave, that the GH Products are not staple commercial products for the purposes of s 117(2)(b) of the Act. However, Generic Health contends that, notwithstanding that concession, the evidence does not support a conclusion that there is a prima facie case that Generic Health had reason to believe that a person to whom it supplied GH Products would put them to an infringing use, so as to make s 117(2)(b) applicable.
The primary judge observed that both the GH Products and the Abilify products are registered for the treatment of schizophrenia, including maintenance of clinical improvement during continuation therapy. His Honour found, therefore, that they are interchangeable for that purpose. Significantly, as his Honour said, that use is the only indicated use for the GH Products. His Honour found, on the evidence before him, that the GH Products would not be traded commercially for other uses. His Honour considered that the evidence before him supported the conclusion that the treatment of schizophrenia comprehended the treatment of all of its symptoms and that aripiprazole is used for that range of treatment with respect to schizophrenia.
The primary judge was satisfied, on the basis of the evidence before him, that there was a prima facie case that the GH Products, if supplied, would be used for purposes that include the treatment of cognitive impairment caused by chronic schizophrenia or treatment-resistant schizophrenia, including in circumstances where a patient fails to respond to two or more of the Claim 7 Drugs. His Honour was satisfied, on that basis, that Generic Health had reason to believe that the GH Products would be put to such a use. His Honour concluded, therefore, that there was a prima facie case that Generic Health would infringe the Patent if it supplied the GH Products, as it threatened to do.
In the light of that conclusion, the primary judge ordered that Generic Health be restrained from engaging in the following acts in Australia without the authority of Otsuka:
·offering to sell or otherwise dispose of the GH Products;
·importing the GH Products;
·keeping the GH Products for the purpose of doing any of the above acts; and
·authorising other people to engage in any of those acts.
A further argument raised by Generic Health concerned the relationship between the primary judge’s determinative finding under s 117(2)(b) and his further obiter finding under s 117(2)(c). Generic Health contended that there was an element of inconsistency between the findings of the primary judge in relation to the two provisions. Section 117(2)(c) relevantly provides that, if the use of a product by a person would infringe a patent, where that use is in accordance with any instructions or inducement given to the person by the supplier, or contained in an advertisement published by or with the authority of the supplier, then the supply of that product to that person is an infringement of the patent by the supplier.
His Honour considered that Otsuka’s case under s 117(2)(c) lay, substantially, in some implied disclosure or inducement to use the GH Products in accordance with the specific integers of Claim 7. His Honour considered, however, that there was no evidence that would enable him to conclude, with any reasonable level of confidence, that prescribing doctors would read into the product information distributed by Otsuka an instruction that the GH Products were to be used, or could be used, in the method of treatment specifically claimed in Claim 7. His Honour based that conclusion upon his construction of the product information.
Section 117(2)(c) requires that there be an instruction or inducement. His Honour found that the product information did not give any such instruction or inducement expressly or impliedly and that it was not sufficient that prescribing doctors would or might use the GH Products for a method of treatment as so claimed. On the other hand, his Honour’s conclusion in relation to s 117(2)(b) was underpinned by the fact that the only use for the GH Products listed in the Register was a use within claim 7. There is no inconsistency between the conclusions that his Honour reached in relation to the two sub-sections.
PROSPECTIVE GROUNDS OF APPEAL
There are three bases upon which Generic Health contends that the primary judge erred in making that order. First, it was suggested that his Honour failed to apply the correct principles in relation to the grant of interlocutory injunctions. Secondly, Generic Health says that the material before his Honour did not support a conclusion that there was a prima facie case that Generic Health had reason to believe that the GH Products would be put to an infringing use. Thirdly, Generic Health also complains about the width of the injunction granted by the primary judge.
Principles for the Grant of Interlocutory Injunctions
The jurisdiction to grant an interlocutory injunction in patent cases, as in other cases, is discretionary, being a part of the jurisdiction to make all such orders as are necessary for doing complete justice in the particular case. There are two main enquiries to which the Court must address itself. The first is whether the applicant for interlocutory relief has made out a prima facie case, in the sense that, if the evidence remains as it is, there is a probability that, at the trial of the action, the applicant will be held entitled to relief. How strong that probability needs to be depends upon the nature of the rights asserted by the applicant and the practical consequences likely to flow from the order sought. The requirement for a prima facie case does not mean that the applicant for relief must show that it is more probable than not that, at trial, it will succeed. Rather, it is sufficient if the applicant shows a sufficient likelihood of success to justify, in all of the circumstances, the preservation of the status quo pending final hearing. The strength of the probability that is required depends upon the nature of the rights that are being asserted and the practical consequences likely to flow if the order sought is or is not granted (Beecham Group Limited v Bristol Laboratories Pty Limited (1968) 118 CLR 618 at 622-3; Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65]; Samsung Electronics Co Limited v Apple Inc (2011) 286 ALR 257 at [55]–[59]) (Samsung).
However, in a particular case, even though the applicant has shown a probability of success, other considerations may make it unjust to grant an injunction. Thus, the second enquiry is whether the inconvenience or injury that the applicant would be likely to suffer, if an injunction were refused, outweighs or is outweighed by the injury that the respondent would suffer if an injunction were granted. The fact that the grant or refusal of an injunction would have the effect of resolving the commercial dispute between the parties is an important aspect of determining where the balance of convenience will lie.
Where the grant, or refusal, of the injunction sought would, in effect, dispose of the matter in favour of one of the parties, an injunction would, in a practical sense, function as final relief. In such a case, the probability of the applicant’s ultimate success will need to be particularly high. In a case where the grant or refusal of interlocutory injunctive relief will have the practical consequence of deciding the applicant’s claims for final relief, and thus deciding the commercial dispute between the parties, the applicant must demonstrate a relatively strong case. That requires that an assessment be made of the strength of the case (Samsung at [35], [37], [49], [87] and [88]).
Where, as in this case, the grant of interlocutory relief will not effectively decide the case, it is not necessary to demonstrate as strong a case as would be required if the grant of injunction would have that consequence. There has been no suggestion in the present case that the grant of the injunction ordered by the primary judge would have the consequence of deciding the dispute between Generic Health and Otsuka. The question is whether his Honour failed to make an assessment of the strength of Otsuka’s case. The primary judge correctly observed that, when considering an application for an interlocutory injunction, the Court must address itself to the two enquiries mentioned above.
The question of whether damages will be an adequate remedy for the alleged infringement of an applicant’s rights involves an assessment by the Court as to whether, absent an injunction, the applicant would, in material respects, be in as good a position as if confined to a remedy in damages. The primary judge accepted the proposition that, in order to obtain an interlocutory injunction, the applicant must demonstrate that, if no injunction is granted, it will suffer irreparable harm for which damages will not be adequate compensation. His Honour accepted that the issue of whether the applicant had made out a prima facie case, and the question of the balance of convenience and justice, were related inquiries.
The primary judge considered the various factors advanced by the parties as to the balance of convenience and justice. That included the assertion by Generic Health that its case on the invalidity of Claim 7 of the Patent was strong and that the prima facie case on infringement was extremely weak, all the more so when weighed against its case on invalidity. His Honour accepted that it was necessary to weigh in the balance the apparent strengths and weaknesses of the parties’ respective cases, along with all other matters that assist in informing the Court where the balance of convenience and justice lay. There is no reason to conclude that his Honour did not do so. Having concluded that there was a prima facie case that the GH Products, if permitted to be supplied, will be administered in a method of treatment that would infringe Claim 7, his Honour weighed the strengths and weaknesses of the parties’ respective cases, along with all other matters, in order to determine where the balance of convenience and justice lay.
In the circumstances of this case, the primary judge made no error in his summary of the principles appropriate to the granting of interlocutory injunctions. His Honour identified and correctly applied the relevant principles.
Reason to Believe
Generic Health complains that the conclusion of the primary judge that it had reason to believe that the GH Products would be put to an infringing use was not supported by any reasons. It also complains that there was no positive evidence that it had the requisite reason to believe. Generic Health says that its product information did not refer to the infringing use and it did not induce doctors to prescribe it for that purpose. Further, Generic Health’s General Manager gave unchallenged evidence that he was not aware that the GH Products might be prescribed for an infringing use.
Generic Health contends that, at its highest, the evidence of Professor Singh is no more than evidence, in a general sense, that aripiprazole may be used to treat negative symptoms or cognitive impairment symptoms where patients have failed to respond to more than one anti-psychotic drug. It says that that is not evidence that the method of treatment in Claim 7 of the Patent has been carried out and that there was no evidence that the switching described by Professor Singh was in order to treat a disorder of cognitive impairment caused by one of the three sub-forms of schizophrenia. It says that there was no evidence that a patient who switched to aripiprazole had failed to respond to two of the Claim 7 Drugs, as opposed to one of the Claim 7 Drugs and another anti-psychotic drug.
Generic Health accepts that there was evidence that patients may be switched to aripiprazole, but asserts that that evidence was not a sufficient basis for finding that there was a prima facie case that it, Generic Health, had reason to believe that the GH Products would be used for an infringing purpose. It says that there is no evidence that the GH Products would be used in a method of treatment that has all of the integers of Claim 7 and that there is no objective criteria by which a finding that Generic Health had reason to believe that the GH Products could be used in that way can be supported.
Generic Health characterises as hypothetical Otsuka’s case that Generic Health has reason to believe that the GH Products would be put to an infringing use. It says that Otsuka’s case rests essentially on a prospect that clinicians may switch a patient suffering from cognitive impairment caused by one of the three sub-forms of schizophrenia from one of the Claim 7 drugs to aripiprazole after that cognitive impairment failed to respond to treatment by two or more of the Claim 7 drugs. Generic Health contends that, considered objectively, the evidence before the primary judge did not rise any higher than that there was a prospect of such a switch being made and that the evidence did not address the likelihood that clinicians would in fact switch patients in the manner disclosed. It says that there was no evidence that would enable the Court to conclude, with any reasonable level of confidence, that prescribing doctors would read into the product information published by Generic Health in relation to the GH Products an instruction that the GH Products are to be used or can be used in the method of treatment disclosed in Claim 7. Therefore, Generic Health contends, the evidence did not meet the objective standard required to establish a prima facie case that it had reason to believe that the GH Products would be put to an infringing use.
The question is whether there were factual matters known to Generic Health that would lead a reasonable person to believe that the GH Products would be put to an infringing use. It is not to the point that Generic Health, through its relevant officers, did not actually have such a belief. The question is whether there was material before the primary judge that could support a finding that a reasonable person in the position of Generic Health would have reason to hold such a belief.
The primary judge set out all of the evidentiary material on which his conclusions were based (see [84]-[97]), before stating his conclusion that Generic Health had, on the basis of that material, reason to believe that the GH Products would be put to an infringing use (see [98]). The unchallenged prima facie factual findings, upon which his Honour’s conclusions were based, included the following critical findings:
·both the GH Products and Abilify are registered in the Register for the treatment of schizophrenia, including maintenance of clinical improvement during continuation therapy;
·the GH Products and Abilify are therefore interchangeable for that purpose; and
·that use is the only indicated use for the GH Products (see [94]).
His Honour also found that the GH products would not be traded commercially for any other use than their sole indicated use (see [94]) and that the treatment of schizophrenia comprehended the treatment of cognitive impairment symptoms (see [97]), the inference being that the GH Products’ sole indicated use on the Register fell within Claim 7 of the Patent. Those findings are capable of supporting the conclusion that Generic Health had sufficient knowledge for a reasonable person in Generic Health’s position to reasonably believe that the GH products would be put to an infringing use.
Generic Health’s contentions would invite the Full Court to weigh again the material already considered by the primary judge in order to determine whether there is a prima facie case that Generic Health had reason to believe that the GH Products would be put to an infringing use. The decision to grant or not to grant an interlocutory injunction is a discretionary one. In respect of appeals against decisions involving the exercise of such discretion, there is a strong presumption in favour of the correctness of the decision appealed from. Such a decision should be affirmed unless the appellate court is satisfied that it is clearly wrong (see Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 at 627).
It was open to the primary judge, on the evidence before him, to find that Generic Health would have reason to believe that, if it supplied the GH Products in Australia, they would be used for treating patients who were suffering from cognitive impairment caused by treatment-resistant schizophrenia and who had failed to respond to two or more of the Claim 7 Drugs. That would be an infringing use. I consider that there is insufficient doubt as to the correctness of the conclusion reached by the primary judge in that regard to justify the grant of leave to appeal.
Form of Relief
Generic Health asserts that the form of injunctive relief granted by the primary judge is broader than the relief that should be imposed where liability for indirect infringement of a pharmaceutical product for a specific form of treatment has been established at a provisional level. It complains that the order made would restrain Generic Health from distributing the GH Products for the purpose of treatment of schizophrenia per se, which, it says, is not within the scope of the monopoly granted by the Patent. Rather, it says, the monopoly is limited to a specific treatment regime, where the alleged disorder was caused by one of the three subforms of schizophrenia and failed to respond to treatment by at least two of the Claim 7 Drugs. Generic Health says that the injunction granted is in wider terms than are necessary to do justice in the particular case, because the effect of the order is to prevent Generic Health from supplying an unpatented product for an unpatented purpose.
Following the hearing of the application by the primary judge, Generic Health proffered an undertaking to the Court with respect to the marketing of the GH Products. In substance, Generic Health undertook not to advertise or promote the GH Products specifically for the treatment of the Claim 7 Disorders in circumstances where the patient has failed to respond to at least two of the Claim 7 Drugs. Generic Health also proffered an undertaking that it would send a letter to pharmacists every three months advising that the GH Products were not to be substituted for the Abilify products on any non-Pharmaceutical Benefits Scheme prescription. In addition, Generic Health had offered an undertaking, prior to the hearing of the application for interlocutory relief, to keep full and proper accounts of all of its sales of the GH Products.
The primary judge was not satisfied that those undertakings should be accepted in lieu of interim injunctive relief that would restrain Generic Health from importing and supplying the GH Products or keeping those products for supply in Australia. His Honour considered that, although the proffered undertakings may, to some extent, alleviate the injury that was likely to be suffered through the supply of the GH Products, the extent to which the injury would be alleviated was uncertain and would never be clear. More fundamentally, his Honour considered, the undertakings would not prevent the consequences that would ensue for Otsuka by reason of the reduction in price of the Abilify products in relation to the Pharmaceutical Benefits Scheme.
The evidence does not support a conclusion that not advertising the GH Products specifically for use in the method of treatment described in Claim 7 of the Patent would prevent the GH Products from being used in that way. Rather, the unchallenged primary findings made by the primary judge, albeit on a prima facie basis, suggest the contrary. The material before his Honour demonstrates that, from an objective point of view, there was reason to believe that the GH Products, being a generic form of aripiprazole, would be put to an infringing use.
The complaint as to the terms of the injunction ignores the clear language of s 117. If the prerequisites specified in s 117 are satisfied in relation to the Patent, any supply of a product by one person to another is an infringement of the Patent. The order made by the primary judge does not go beyond the language of s 117. There is insufficient doubt as to whether the prerequisites were satisfied, at least on a prima facie basis, to warrant the grant of leave to appeal on that ground.
CONCLUSION
The application for leave to appeal should be refused with costs.
I certify that the preceding forty four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 6 March 2013
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 490 of 2012
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: GENERIC HEALTH PTY LTD (ACN 110 617 859)
Applicant
AND: OTSUKA PHARMACEUTICAL CO., LTD
First RespondentBRISTOL-MYERS SQUIBB COMPANY
Second Respondent
JUDGES:
EMMETT, BENNETT AND GREENWOOD JJ
DATE:
6 MARCH 2013
PLACE:
SYDNEY
REASONS FOR JUDGMENT
BENNETT J
Otsuka Pharmaceutical Co., Ltd (Otsuka) is the patentee of Australian Patent No 2005201772, titled ‘Substituted carbostyril derivatives as 5-HT1A receptor sub-type agonists’ (the 772 Patent) and Australian Patent No 2002226752 with the same title (the 752 Patent). The 772 Patent was a divisional application of the complete application for the 752 Patent. Both patents claim a priority date of 29 January 2001 and claim the use of a carbostyril compound (relevantly, aripiprazole) for the production of a medicament having certain features and a method for treating a patient involving the use of aripiprazole. Aripiprazole is used for the treatment of schizophrenia and other disorders of the central nervous system said to be associated with the 5-HT1A receptor.
A packaged tablet formulation containing aripiprazole is marketed by Bristol-Myers Squibb Company, by its Australian subsidiary, under licence from Otsuka under the name “Abilify”. A number of Abilify products are registered on the Australian Register of Therapeutic Goods (the ARTG) and are indicated for three treatments, including, relevantly, for the treatment of schizophrenia including maintenance of clinical improvement during continuation therapy.
Generic Health Pty Ltd (Generic Health) has obtained registration of a number of aripiprazole products on the ARTG. The products that are registered under the ARIPIPRAZOLE GH label (the GH Products) are registered for the first of the three indications for which the Abilify products are registered, that is, the treatment of schizophrenia including maintenance of clinical improvement during continuation therapy.
Otsuka sought interim relief on the basis that Generic Health’s intended sale of the GH Products would infringe claims 1 and 7 of the 772 Patent and claims 1 to 3 and 8 to 10 of the 752 Patent. Generic Health cross-claimed seeking revocation of both patents.
The primary judge found that there was a prima facie case that claim 7 of the 772 Patent would be infringed by the proposed supply by Generic Health of the GH Products. His Honour found that there was a prima facie case that the sale of GH Products would constitute infringement of claim 7 under s 117(1) of the Patents Act 1990 (Cth) (the Act), based on s 117(2)(b) of the Act.
Generic Health seeks leave to appeal from the grant of an interlocutory injunction which is in the following terms:
Until further order of the Court, the Respondent by itself, its directors, officers, servants and agents or otherwise be restrained from engaging in the following acts in Australia without the licence or authority of the First Applicant:
(a)offering to sell or otherwise dispose of the [GH Products];
(b) importing the GH Products;
(c)keeping the GH Products for the purpose of doing any of the acts described in sub-paragraphs 1(a) and 1(b) above;
(d)authorising other people to engage in any of the acts described in sub-paragraphs 1(a) to 1(c) above.
Infringement by the ‘use of a product’, is determined by s 117 of the Act, which provides:
(1)If the use of a product by a person would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the supplier unless the supplier is the patentee or licensee of the patent.
(2)A reference in subsection (1) to the use of a product by a person is a reference to:
(a)if the product is capable of only one reasonable use, having regard to its nature or design—that use; or
(b)if the product is not a staple commercial product – any use of the product, if the supplier had reason to believe that the person would put it to that use; or
(c)in any case—the use of the product in accordance with any instructions for the use of the product, or any inducement to use the product, given to the person by the supplier or contained in an advertisement published by or with the authority of the supplier.
The issue in this appeal concerns s 117(2)(b) of the Act. For the purposes of this application for leave to appeal, it is not relevantly in dispute that aripiprazole is not a ‘staple commercial product’. The issues that arise in the appeal are:
·Did the primary judge err in holding that Otsuka had established a prima facie case of infringement?
·If the conditions of s 117(2)(b) are satisfied, does the prohibited supply extend to supply for methods of treatment that fall outside the claimed use?
·Did the primary judge properly consider whether Generic Health had the requisite reason to believe within s 117(2)(b) of the Act?
·Whether the primary judge, having found a prima facie case, was obliged to consider and did consider the strength of that case as required by the principles set down in Samsung Electronics Co Limited v Apple Inc [2011] FCAFC 156; (2011) 286 ALR 257.
·Did the order made by the primary judge go beyond what is reasonable protection of the patentee’s rights which may be enforced by a judgment (Jackson v Sterling (1987) 162 CLR 612 at 621)?
·Should Generic Health be granted leave to appeal from the interlocutory injunction?
THE 772 PATENT
There is no need to traverse the specification in terms of the background or related art. Relevantly, the specification sets out the following:
·The invention relates to a method of treating a patient suffering from a disorder of the central nervous system associated with the 5‑HT1A receptor sub-type.
·Previous reports were that aripiprazole acted as an antipsychotic but it had not been reported that it had agonistic activity at the 5-HT1A receptor sub-type. Previous reports indicated that drugs that act via the 5-HT1A receptor are used for treatments for alcohol abuse and disorders associated with neuronal degeneration and, inter alia, neuroprotective effects. 5-HT1A agonists are said to be effective in the treatment of cognitive impairment in Alzheimer’s disease, Parkinson’s disease and senile dementia. Partial agonists have been used for the treatment or prevention of cognitive disorders associated with Alzheimer’s disease, Parkinson’s disease or senile dementia. A number of other uses for 5-HT1A agonists and partial agonists are set out.
·Turning to schizophrenia, the specification explains that a variety of antipsychotic drugs have been developed during the last decade, which were reported to be more effective against the negative symptoms and cognitive impairments associated with schizophrenia than typical anti-psychotic drugs. The specification then describes the fact that patients may become treatment-resistant and not respond, or become refractory in response, to antipsychotic therapy. These patients are referred to as treatment-resistant and treatment-refractory schizophrenic patients. Such patients may display positive symptoms, negative symptoms, as well as cognitive impairments such as cognitive dysfunction or cognitive disturbances.
·The specification says that cognitive impairment exists separately from the psychic symptoms in a schizophrenic individual.
·Generally speaking, the specification draws a connection between 5–HT1A receptor agonist activity and improvement in cognitive impairment.
Clozapine is an antipsychotic drug that is effective against treatment-resistant schizophrenia and has been reported to be effective against cognitive impairments in treatment-resistant schizophrenics. The 5‑HT1A receptor has been demonstrated to play a role in the therapeutic efficacy of clozapine against treatment-resistant schizophrenia and chronic impairments. While clozapine was effective, its use was limited due to severe side-effects.
The need expressed in the specification was for the development of a safe antipsychotic drug with potent, full or partial agonist activity at 5‑HT1A receptors: the carbostyril compound of the invention. This was said to be:
a more potent and highly safe drug for curing treatment-resistant schizophrenia, cognitive impairments caused by treatment-resistant schizophrenia, inveterate schizophrenia, cognitive impairments caused by inveterate schizophrenia, chronic schizophrenia, cognitive impairments caused by chronic schizophrenia and the like.
In particular, it is stated, the compound may be a potent and highly safe drug therapy for those conditions which fail to respond adequately to other named antipsychotic drugs.
The relevant claim for the purposes of the alleged infringement is claim 7, relevantly:
A method for treating a patient suffering from disorders of the central nervous system associated with 5‑HT1A receptor sub-type, which disorder
(i)selected from cognitive impairment caused by treatment-resistant schizophrenia, cognitive impairment caused by inveterate schizophrenia, or cognitive impairment caused by chronic schizophrenia, and
(ii)fails [to respond] to antipsychotic drugs selected from [twelve named compounds],
comprising administering to said patient a therapeutically effective amount of [aripiprazole].
(emphasis added)
It was not in dispute that the failure to respond in (ii) must be to two or more of the named drugs.
It can be seen that claim 7 is directed to a method for treating a patient suffering from cognitive impairment caused by schizophrenia and not to a method of treatment for schizophrenia itself.
PRIMA FACIE CASE
Legal principles: section 117(2)(b)
Collins v Northern Territory
Section 117(2)(b) of the Act was relevantly considered by the Full Court in Collins v Northern Territory (2007) 161 FCR 549 (Collins FC) and by the High Court in Northern Territory v Collins (2008) 235 CLR 619 (Collins HC).
As to the words “reason to believe” in s 117(2)(b) of the Act, French J observed in the Full Court that they and similar formulae frequently condition the exercise of statutory powers and require, at least, an objective basis of the relevant belief and, according to context, require actual belief (at [64]), and not unsupported belief (at [65]). Justice French said (at [64]), that “reason to believe” in s 117(2)(b) should be construed as purely objective, ‘in the sense that there were factual matters known to the supplier which would lead a reasonable person to believe that the product would be put to an infringing use’. Justice French, who said at [66] that his observations were ‘strictly obiter’, expressed the opinion that to construe s 117(2)(b) as requiring actual knowledge supported by reasonable grounds would render the scope of liability for contributory infringement under Australian law narrower than that under United States or United Kingdom law. It would require both subjective belief and the objective basis for it to be proven. His Honour considered that the better construction would be an objective one.
These views were not the subject of comment by Branson and Sundberg JJ. Justices Branson and Sundberg did make other observations, such as (at [135]):
The use the subject of s 117(2)(b) is also an expansion of the common law, even though restricted to non-staple products. A supplier’s “reason to believe” was never sufficient to found contributory infringement at common law. Even knowledge that the purchaser would use the article for infringement was not enough. The use the subject of s 117(2)(c) would appear to reflect the common law position.
(emphasis original)
On appeal to the High Court, Hayne J at [34] – [51] considered the proper construction of s 117 of the Act:
·Section 117 imposes liability on the supplier where the supply would otherwise not infringe but where use of the product supplied by the person to whom it is supplied would infringe the patent (at [42]).
·A variety of quite different cases may arise for consideration under s 117 and may present ‘radically different issues about the relationship between the relevant use and the patentee’s exclusive rights to exploit the relevant invention’ (at [38]).
·From the drafting history of the provision, it appears that s 117(2)(b) was seen, in the Explanatory Memorandum, as ‘cognate with, if not a species of, supply accompanied by “a positive inducement … to perform actions which would innocently or knowingly infringe”. This points against reading s 117(2)(b) as having extended or expansive reach’ (at [46]).
·Section 117(2)(b) addresses “known use” in contrast to “only use” in s 117(2)(a) and “instructed use” in s 117(2)(c) (at [35]).
·Section 117(2)(b) deals with cases where the supply of a product can have more than “one reasonable use” (at [47]). Because the act of supply is not otherwise an infringement of the patentee’s monopoly, “staple commercial product” as used in s 117(2)(b) should not be given a narrow meaning (at [43]). To do so would expand the classes of supply which are reached by s 117, thus expanding the rights of the patentee.
·The question posed by s 117(2)(b) concerns the uses to which the product is in fact put. If it is supplied commercially for various uses, it is a staple commercial product and beyond the reach of s 117(2)(b). If it is not a staple commercial product and was previously traded for only one use, s 117(2)(b) would apply where the supplier has reason to believe that it will be used for a new and infringing use (at [50] – [51]).
Acting Chief Justice Gummow and Kirby J approved the reasoning of Hayne J and noted at [21] that s 117 of the Act ‘does not itself speak to the exclusive rights given by the patent. Rather, the provision identifies the conduct and prescribes conditions in which that conduct will be an infringement of the patent’. Their Honours also said (at [21]) that the critical condition for the imposition of liability is that the use of the product by the person to whom it is supplied would infringe the patent. Justice Crennan, with whom Heydon J agreed, confirmed (at [131]) that s 117 can be engaged in respect of a supply of a raw material for carrying out a patented method, depending on the construction of the claims.
Apotex v Sanofi-Aventis
In Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (No 2) (2012) 204 FCR 494, the supplier, Apotex Pty Ltd (Apotex), was found to have reason to believe that the supplied product would be put to the infringing use to which s 117(2)(b) applied. The reasons for that conclusion were explained by the primary judge and by the Full Court. The primary judge found that the use of the compound as directed by Apotex would inevitably have included the infringing use and the primary judge had found that Apotex’s approved product information instructed a medical practitioner to use the relevant product for the claimed use. Her Honour said that it followed from her analysis that Apotex had the requisite reason to believe.
Chief Justice Keane said (at [54]) in the Full Court that Apotex’s instruction meant that it had ‘ample reason’ to believe that medical practitioners would put the product to the use as a method of treating psoriasis which is associated with, and a diagnostic criterion for, the subject of the directed use, psoriatic arthritis. Justices Bennett and Yates considered the medical evidence, which differed as to how medical practitioners of different specialties would use the product. In response to a submission that the primary judge had been in error in finding reason to believe on the part of Apotex based on a finding that the administration of the product to treat one psoriatic arthritis would inevitably treat or prevent psoriasis, their Honours Bennett and Yates JJ emphasised an instruction in the Apotex product information as an acknowledged reality that rheumatologists do seek, and will seek, to treat both conditions when patients present with psoriatic arthritis and psoriasis concurrently (at [154]).
I note that on 14 December 2012, the High Court granted Apotex special leave to appeal from the Full Court’s decision in Apotex v Sanofi-Aventis.
Grimme v Scott
In Grimme Landmaschinenfabrik GmbH & Co KG v Scott [2010] EWCA Civ 1110; [2011] FSR 7, the England and Wales Court of Appeal considered contributory infringement under s 60(2) of the Patents Act 1977 (UK) (the UK Act). Section 60(2) provides:
Subject to the following provisions of this section, a person (other than the proprietor of the patent) also infringes a patent for an invention if, while the patent is in force and without the consent of the proprietor, he supplies or offers to supply in the United Kingdom a person other than a licensee or other person entitled to work the invention with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the United Kingdom.
(emphasis added)
Section 60(3) of the UK Act deals with the application of subsection (2) in circumstances where there is a supply or offer of a staple commercial product.
It can be seen that the language of s 60(2) of the UK Act differs from that of s 117 of the Act. Despite those differences, the reasons of the Court (delivered by Jacob LJ) bear consideration. Relevantly, the question before the Court of Appeal was whether s 60(2) of the UK Act requires proof that the supplier knew that, or the circumstances made it obvious that, the user actually intended to use the machine in a way in which it would infringe by switching steel rollers for rubber rollers. This bears some similarity to the question in s 117(2)(b) of the Act as to whether the suppliers must know that the user would use the supplied goods for an infringing use. At [76], the Court observed that the extent of switching ‘in the real world’ was a matter that was premature at that stage and said that this question really arises in the consideration of damages. The Court said that they would proceed on the basis that switching sometimes happens.
The Court considered the origins of s 60(2) of the UK Act and noted the approach of Patent Courts in other countries of Europe, notably the Netherlands and Germany. The Court also referred to US law but observed that the different terminology in the US Patent Act 1952 was a reason why US laws were not of direct assistance in resolving any obscurities in the meaning of the provision before them.
It is, of course, the case that each statutory provision must be construed according to its terms but it remains helpful to consider the reasoning directed to infringement by supply under the UK Act in the context of the European Patent Union and the Community Patent Convention there discussed.
At [88] the Court said:
Section 60(2) creates a statutory tort, but it does not spring from any previous notional or common law tort. Its distinctive features, by way of contrast with common law tortious claims, are that the tort is actionable (1) even though what is supplied is capable of perfectly lawful, non-infringing use, (2) even though what is supplied never has been and may never in fact be used in a way directly infringing the patent in suit, (3) without any damage being suffered by the patentee, and (4) at the moment of supply, irrespective of anything that may or may not occur afterwards.
(emphasis added)
This, the Court observed (at [89]), stands in contrast with the common law principle. It also, as the Court said, makes the description “contributory” as opposed to “indirect” infringement something of a misnomer (at [90]). This partially reflects the observation by Branson and Sundberg JJ in Collins (FC) as to the contrast between s 117(2)(b) and the common law.
In turning to the requirement of knowledge, the Court returned to the common law, recognising that it was not applicable to resolve the meaning of s 60(2) of the UK Act (at [106]). However, the Court observed that in the context of the economic tort of inducing a breach of contract and of causing loss by an unlawful means, it is established that nothing other than a specific subjective intention is sufficient for liability. However, the Court concluded, it is not the case that there is no infringement unless there is actual direct infringement. This observation was made in part by reference not only to supply but also to the fact that there can be infringement by ‘offers to supply’, although that inclusion of ‘offers to supply’ in s 60(2) did not form the sole basis of the Court’s conclusion.
The Court found that the relevant intention for s 60(2) of the UK Act was not that of the supplier, but that of the ultimate user of the product. The question before the Court, the Court said (at [108]), was what the supplier knows or ought to know about the intention of the person who is in a position to put the invention into effect – the person at the end of the supply chain. The Court adopted what had been said by Arnold J in KCI Licensing Inc v Smith & Nephew Plc [2010] EWHC 1487 (Pat); [2010] FSR 740 at [200]. That is, there can be infringement ‘not merely if the supplier knows that the means are intended to put the invention into effect, but also if that would be obvious to a reasonable person in the circumstances’ (which accords with the conclusion of French J in Collins (FC)). The user, as noted at [111], would not necessarily have formed the intention at the time of supply.
At [112] the Court adopted what their Lordships described as the ‘inherently probable’ view, which was that it was enough if the supplier knew (or it was obvious in the circumstances) at the time of his supply that some (disregarding maverick or unlikely use) ultimate users would infringe. The Court acknowledged the force of the ‘linguistic point’ that the relevant provision requires the alleged infringer to know that the means are intended to put the invention into effect, and that it could be said that the use of the present tense would mean that a future intention is not enough. Notwithstanding that, the Court concluded that the inherently probable view was the correct construction.
The Court set out its reasons for adopting the ‘inherently probable’ view at [115] – [131]. The Court said that whether the invention will be put into effect by some users would need to be established in the usual way on the balance of probabilities. The Court also rejected the linguistic point by taking a purposive approach to construction because, their Lordships said, the provision is clearly aimed at people who supply things which will be used to infringe in circumstances when they know or ought to know that infringement will be the result (at [119]). The Court rejected a requirement that the intention of the individual ultimate user must be known at the moment of the alleged infringement and said that, while the intention of the ultimate buyer is the relevant factor, ‘a future intention of a future buyer is enough if that is what one would expect in all the circumstances’ (at [125]).
The Court said (at [131]): ‘[i]t is not enough merely that the means are suitable for putting the intention [sic] into effect (for that is a separate requirement), but it is likely to be the case where the supplier proposes or recommends or even indicates the possibility of such use in his promotional material’. There was, in that case, a suggestion or proposal from the supplier for an infringing use. That is, the circumstances in Grimme fell within circumstances in which, had the case been heard in Australia, s 117(2)(c) of the Act would have been the relevant statutory provision. However, the reasoning extended to circumstances where there was no such suggestion or proposal; that is, to s 117(2)(b).
The decision in Grimme was followed by the England and Wales Court of Appeal in KCI Licensing Inc v Smith & Nephew Plc [2010] EWCA Civ 1260; [2011] FSR 8. In the reasons of the Court, delivered by Jacob LJ, the Court at [53] summarised the principles from Grimme:
i)The required intention is to put the invention into effect. The question is what the supplier knows or ought to know about the intention of the person who is in a position to put the invention into effect – the person at the end of the supply chain, [108].
ii) It is enough if the supplier knows (or it is obvious to a reasonable person in the circumstances) that some ultimate users will intend to use or adapt the “means” so as to infringe, [107(i)] and [114].
iii)There is no requirement that the intention of the individual ultimate user must be known to the defendant at the moment of the alleged infringement, [124].
iv)Whilst it is the intention of the ultimate user which matters, a future intention of a future ultimate user is enough if that is what one would expect in all the circumstances, [125].
v)The knowledge and intention requirements are satisfied if, at the time of supply or offer to supply, the supplier knows, or it obvious [sic] to a reasonable person in the circumstances, that ultimate users will intend to put the invention into effect. This has to be proved on the usual standard of the balance of probabilities. It is not enough merely that the means are suitable for putting the invention into effect (for that is a separate requirement), but it is likely to be the case where the supplier proposes or recommends or even indicates the possibility of such use in his promotional material, [131].
As recognised by French J in Collins (FC) and the majority of the High Court in Aktiebolaget Hassle v Alphapharm Pty Ltd (2002) 212 CLR 411, it is appropriate to take account of the approach of the courts of other countries to similar provisions of legislation governing patents. Such approaches cannot be determinative of the construction of the Australian legislation but, where there is a degree of uncertainty in the drafting of a provision concerning an issue addressed in such legislation in other countries, the principles of approach can be helpful.
The decision of the primary judge
Supply for methods of treatment that fall outside the claimed use
At [171], the primary judge concluded:
When s 117(1) is invoked by reference to s 117(2)(b), any use of the product that would infringe the patent imposes a liability on the supplier by reason of the supply of the product, if the supplier has reason to believe that the product would be put to that use. Thus, in the present case, the respondent’s liability for infringement, if finally established, would be fixed by the fact of its supply of the GH products.
This conclusion follows from s 117. The primary judge found, and it is not challenged for the purposes of this application for leave to appeal, that the GH Products are not staple commercial products for the purposes of s 117(2)(b) of the Act. If the supplier had reason to believe that the supplied product would be put to the infringing use, then supply for any use of the product, being a non-staple commercial product, is an infringement, even if the use for which it is actually supplied is a non-infringing use.
Reason to believe
Evidence as to schizophrenia and its treatment
The primary judge set out in some detail the evidence concerning schizophrenia and its treatment, as to which there is no dispute. Relevantly:
·It has been known since schizophrenia was first identified nearly a hundred years ago that cognitive deterioration can occur in patients suffering from the illness. Cognitive impairment is understood to be an accompaniment of schizophrenia. The current view, as expressed in the literature, is that the majority of all patients with schizophrenia suffer from some degree of cognitive impairment. In some cases this impairment is identifiable when the patient first presents with the illness.
·Generally speaking, a broad distinction is made between “acute” schizophrenia and “chronic” schizophrenia.
·Schizophrenia is treated with antipsychotic medications described as being “typical” or “first generation” and “atypical” or “second generation” medications. Second generation antipsychotics have fewer side effects. Aripiprazole is a second generation antipsychotic (although some regard it to be the first in a new generation of antipsychotics). Currently, second generation antipsychotics are more widely used in Australia than first generation antipsychotics. It is presently rare for a new patient to be commenced on a first generation antipsychotic.
·The primary judge discussed the positive and negative symptoms of schizophrenia. Positive symptoms include hallucinations, while negative symptoms include “poverty of thinking”.
·The primary judge discussed the nature of cognitive impairment and the main manifestations of this impairment with schizophrenia.
·Chronic schizophrenia includes “treatment-resistant” and “treatment-refractory” schizophrenia.
·Practising psychiatrists tend to distinguish between “acute” treatment and longer-term treatment.
·The Royal Australian and New Zealand College of Psychiatrists clinical practice guidelines (the Guidelines) recommend switching to second generation antipsychotic medication where there are persistent positive or negative symptoms or distressing side-effects with conventional medications. The guidelines recommend that clozapine be introduced if evidence of treatment-resistant schizophrenia is present.
The primary judge accepted the evidence of Professor Singh, a consultant psychiatrist called on behalf of Otsuka, that it would now be very rare for a new patient presenting with schizophrenia to be commenced on a first generation antipsychotic. While a small proportion of patients who are stable on a first generation antipsychotic will continue with the therapy, most patients who were started on antipsychotics will have been switched to second generation antipsychotics, or are likely to be switched to that therapy. Professor Singh estimated that about 25% of all patients suffering from schizophrenia would be switched from one second generation antipsychotic to another and the majority of patients suffering from chronic schizophrenia will need to switch medications at some stage.
This evidence of Professor Singh was not in dispute. Professor McGorry, a consultant psychiatrist called on behalf of Generic Health, generally agreed with Professor Singh’s evidence concerning schizophrenia, its symptoms and treatment (as noted by the primary judge at [37]). Professor McGorry also drew attention to the recommendations in the Guidelines referred to above. Professor McGorry’s evidence was that he would commence a patient on a second generation medication and employ a switching of antipsychotic medications in an effort to optimise response.
Professor McGorry said that he did not believe that aripiprazole was commonly used to treat acute episodes, leading his Honour to infer that Professor McGorry saw its use to be mainly in the treatment of chronic schizophrenia. Professor McGorry saw its characteristics as an advantage when treatment was initiated in more stable outpatients, either for the first time or through switching.
Professor Singh and Professor McGorry did not agree on the significance of aripiprazole in contributing to cognitive enhancing properties if a patient suffered schizophrenia. The debate concerned the relevance or consequence of the fact that aripiprazole acts as a partial agonist at the 5-HT1A receptor. 5-HT1A is a serotonin receptor. A drug that has partial agonist properties at the 5-HT1A receptor has a tendency partially to stimulate some serotonin receptors. Dopamine is a chemical transmitter that facilitates the transmission of an electrical signal from one nerve cell to another. Dopamine activity is believed to be responsible for the symptoms of schizophrenia; overactivity of dopamine in some parts of the brain is believed to be responsible for the positive symptoms and underactivity in other parts of the brain is one of the theories used to explain negative symptoms. Dopamine receptors are referred to as D1, D2 and D3, etc. Partial dopamine agonism is the tendency partially to stimulate some dopamine receptors. Dopamine antagonism is the blockage of the dopamine receptor so that the neurotransmitter role of dopamine is completely blocked. All antipsychotics act as dopamine antagonists. Aripiprazole is a partial dopamine agonist at the D2 receptor.
The expert witnesses did not agree on the consequences of aripiprazole’s action on the 5-HT1A receptor with respect to cognitive enhancing properties. The primary judge said that it was not necessary to resolve this debate between the experts, concerning the significance and mechanism of the activity of aripiprazole in improving cognitive impairment. His Honour said that it was sufficient to note that both experts appeared to agree that aripiprazole acts as a partial agonist at the 5-HT1A receptor.
There was also a debate between Professor Singh and Professor McGorry as to the efficacy of aripiprazole in the context of other second generation antipsychotics. The primary judge noted at [49] that there was at least agreement between them that second generation antipsychotic drugs are used in the treatment of cognitive impairment associated with schizophrenia. The primary judge (at [50]) referred to Professor Singh’s evidence that, if he were presented with a patient suffering from negative and cognitive symptoms of schizophrenia, he would consider prescribing aripiprazole because of its characteristics, including what he saw as its particular advantages, including that it is a partial agonist at the 5‑HT1A receptor.
The primary judge’s conclusions on whether there was a prima facie case
The primary judge concluded (at [84]) that the evidence showed that:
·Cognitive impairment is a symptom or domain of schizophrenia, including chronic and treatment-resistant schizophrenia. Chronic schizophrenia is the outcome of the majority of those who suffer the illness.
·Aripiprazole is recommended for use as, and is used for, first and second line treatment as well as later line treatment for patients suffering from schizophrenia. It is used as a medication for schizophrenics who fail to respond to antipsychotic drugs, including the first generation and other second generation antipsychotics identified in claims 1 and 7 of the 772 Patent.
·The GH Products are registered on the ARTG for the treatment of schizophrenia, including maintenance of clinical improvement during continuation therapy. This is the only indicated use for the GH Products.
·The evidence supports the conclusion that the treatment of schizophrenia comprehends the treatment of all of its symptoms and domains. Aripiprazole is used for that range of treatment with respect to schizophrenia, including the treatment of cognitive impairment caused by chronic schizophrenia or treatment-resistant schizophrenia and including where a patient fails to respond to other antipsychotic drugs selected from those identified in claim 7.
·It is not uncommon (on the view of Professor McGorry) that negative symptoms and other domains of schizophrenia are treated in continuation therapy with an antipsychotic agent. Professor Singh placed greater importance on the use of antipsychotic drugs in continuation therapy (at [96]).
The primary judge concluded (at [98]), from the evidence, that there was a prima facie case that the GH Products would be used for purposes that included the treatment of cognitive impairment caused by chronic schizophrenia or treatment-resistant schizophrenia, including where a patient fails to respond to other antipsychotic drugs selected from those identified in claim 7. His Honour was satisfied on the evidence that there was a prima facie case that Generic Health had reason to believe that the GH Products would be put to that use. Again, the primary judge said (at [99]) that ‘there is a prima facie case that [Generic Health’s] intended acts will infringe the 772 patent by reason of s 117(1) of the Act’.
The primary judge expressed himself satisfied that Otsuka had made out a prima facie case of threatened infringement of the 772 Patent pursuant to s 117(1) of the Act by reason of s 117(2)(b), that would justify the granting of the interim relief (at [83]).
His Honour considered the question of “staple commercial product” and said (at [93]) that the approach contended for by Otsuka was ‘open on the present evidence’. His Honour said that it was not necessary to express a final view on whether the GH Products were, or were not, staple commercial products and declined to do so, but said that it was sufficient to be satisfied that there was a prima facie case that the GH Products were not staple commercial products.
Consideration
Submissions on prima facie case
Generic Health submits that the primary judge gave no basis for his conclusion that there was, objectively, a reason to believe on its part that the GH Products would be put to an infringing use.
Generic Health says that that there was no evidence of knowledge on its part of the use to which the GH Products would be put. None of the evidence cited by the primary judge related to actual knowledge on the part of Generic Health of the matters arising from the evidence of Professor Singh and Professor McGorry.
Generic Health says that the case presented by Otsuka rises no higher than there being a prospect that clinicians may switch a patient in the manner disclosed in claim 7. It also points out that there is no evidence that the GH Products will be used in a method of treatment that has all of the integers of claim 7. That is, it submits, there are also no objective criteria by which a finding that it had reason to believe that its products would be used in the method of claim 7 can be supported.
There was no product information or other direction from Generic Health instructing that the GH Products be used for the infringing use.
Generic Health relies upon the finding of the primary judge at [103] that there was no evidence that would enable him to conclude, with any reasonable level of confidence, that prescribing doctors would read into the Generic Health product information an instruction that the GH Products are to be used or can be used in the method of treatment specifically claimed in claim 7. The product information did not give that instruction expressly or impliedly. Accordingly, s 117(2)(c) did not apply. Generic Health relies on this finding as antithetical to a conclusion that s 117(2)(b) applies, saying that the evidence did not rise above there being a prospect of a ‘switch’ being made.
This is not a case where the supplier has provided instructions or directions for an infringing use (cf Apotex v Sanofi-Aventis). For the purposes of this appeal, it is not contended that the product supplied is a staple commercial product (cf Collins (HC)). The question is whether the supply of aripiprazole to treating doctors, who then prescribe it, is an infringement of s 117(2)(b). There is no present suggestion that Generic Health had actual knowledge that the product would be put to an infringing use. The primary judge explained the use to which at least some doctors would put the product, to treat not only schizophrenia but also the cognitive impairment with which the forms of schizophrenia are associated. This arises, at least, from the use of aripiprazole as a second generation treatment of schizophrenia.
The question is whether it is necessary to establish that Generic Health had reason to believe not only that the product might be used for an infringing use but also that it would, in fact, be so used.
Construction of section 117 of the Act
Section 117 of the Act provides that infringement may be found, although the actual supply is for a use not invented and not claimed, where the supplier has reason to believe that its supplied product would be used in an infringing manner. Section 117 is directed to supply of the product and infringement by supply. “Supply” is defined in Sch 1 to the Act to include “offer to supply”.
The question that arises in this application is the meaning to be attributed to the phrase ‘reason to believe that the person would put it to that use’. The reason to believe is that of the supplier and may be subjective: an actual belief, or objective: that there are reasonable grounds to believe. In each case, the belief is determined on the balance of probabilities.
What is the object of that belief? It is the action of the person to whom the goods are supplied or to whom the offer of supply is made. The infringement is complete after supply, when the relevant user later uses the product. The actual intent of the person, or the use which that person later makes of the goods, would not necessarily be known to the supplier at the time of supply. If there are instructions from the supplier as to an infringing use of the product, it may be easier to establish that there is a reason to believe that the person would put it to that use under s 117(2)(b) (cf Grimme) but such instruction is not necessary for the application of s 117(2)(b). Such circumstances are covered by s 117(2)(c) and would leave no room for the additional operation of s 117(2)(b). It follows that a finding that there was no instruction under s 117(2)(c) is not antithetical to a conclusion that there is a prima facie case under s 117(2)(b).
However, the reasoning in Grimme suggests that s 117(2)(b) cannot apply where there is unlikely, freak or maverick use. Such use may not be a form of “known use”. Otherwise, s 117(2)(b) may have too extended or expansive a reach (cf Collins (HC) at [35], [46] per Hayne J). It would not apply, in my view, if the use by the person to whom supply is made is, without more, contrary to instructed use from the supplier in the absence of further evidence to establish that the supplier had reason to believe that such use would be made. It is not sufficient if the supplier had reason to believe that the person might put the product to the infringing use. Something more is required, as is made clear by the use of “would” rather than “may” or “might” in the subsection.
Professor Singh gave evidence that drugs which act on the 5‑HT1A receptor as well as other 5‑HT receptors are used in, and are considered to be helpful for, the treatment of depression and the treatment of the depressive phase of Bipolar Disorders. At [56] and [57], the primary judge describes the evidence of Professor Singh concerning his evidence of his own practice in treating patients suffering from bipolar disorder. Professor Singh gave evidence that antipsychotic medications would be prescribed as an adjunct to antidepressant medications “because of its ‘synergistic’ effect [of making] the antidepressant medication more effective in treating the patient’s depression”, and that he “prescribes aripiprazole in conjunction with an antidepressant in order to treat depressive episodes and mixed episodes of Bipolar 1 Disorder”.
Claim construction
At [69], the primary judge recognises that claim 7 of Patent 772 “plainly involves the use of a product”. Claim 7 is directed to a method of treating a patient, by the use of aripiprazole, who suffers from disorders of the central nervous system associated with 5‑HT1A receptor sub‑type. At [68], the primary judge recognises the qualifying integers of claim 7 by recognising that the method is qualified by, first, the selection of a particular disorder of cognitive impairment caused by one of three things: treatment‑resistance schizophrenia; inveterate schizophrenia; or chronic schizophrenia, and secondly, the patient’s cognitive disorder fails (has failed) to respond to treatment by the use of antipsychotic drugs selected from the 12 compounds identified at (ii) of claim 7 (as to which, see [10]).
The primary judge recognises that it follows that use of a therapeutically effective amount of aripiprazole in the treatment of a patient suffering from a central nervous system disorder (associated with a 5‑HT1A receptor) of cognitive impairment where the patient’s cognitive impairment is caused by treatment‑resistant schizophrenia or inveterate schizophrenia or chronic schizophrenia and where the patient’s cognitive impairment has failed to respond to the use of drugs selected from the 12 compounds recited in claim 7(ii), that use would infringe claim 7 of Patent 772.
The primary judge observes at [68] that the compounds recited at claim 7(ii) are either first or second generation antipsychotic medications and the novelty in the claimed method lies “in the asserted newly discovered therapeutic effect” of aripiprazole.
At [59], the primary judge sets out the teaching of the complete specification in the context of the known understanding of the treatments for symptoms of schizophrenia. It is not necessary to set out in these reasons the detail of the primary judge’s assessment of those matters. However, these matters should be noted.
First, the specification recites that it has not been reported, prior to the priority date, that compounds in the invention (that is, aripiprazole) have agonistic activity at a 5‑HT1A receptor site.
Second, a range of atypical antipsychotic drugs have been developed (including clozapine) which are more effective in the treatment of cognitive impairment associated with schizophrenia than typical antipsychotic drugs.
Third, some patients either do not respond to these atypical drugs or become “refractory”. The symptoms of treatment‑resistant and treatment‑refractory schizophrenia involve positive and negative symptoms, emotional disorder and cognitive impairment.
Fourth, it is well known that 5‑HT1A receptor agonist activity or 5‑HT1A partial agonist activity plays an important role in treatment‑resistant schizophrenia and cognitive impairment.
Fifth, although clozapine has been reported to improve cognitive impairment, and the 5‑HT1A receptor has been demonstrated to play a role in the therapeutic efficiency of clozapine against treatment‑resistant schizophrenia and cognitive impairment, clozapine has limited use due to its severe side‑effect of producing agranulocytosis (a severe acute and usually fatal disease). Thus, a safe antipsychotic drug with potent, full or partial agonist activity at 5‑HT1A receptors is “earnestly desired”.
Sixth, the compound of the invention (aripiprazole) binds with high affinity and displays a potent, partial agonist activity at 5‑HT1A receptors and has higher intrinsic activity than clozapine with the result that the compound may represent a more potent, and highly safe drug, for curing treatment‑resistant and other forms of schizophrenia, as well as cognitive impairment caused by treatment resistant and other forms of schizophrenia.
The prima facie case
At [83], the primary judge observes that a prima facie case of infringement justifying the granting of the interim relief had been made out.
The primary judge observes at [84] that the evidence, as presently advanced, demonstrates that cognitive impairment is a symptom or domain of schizophrenia, including chronic schizophrenia and treatment‑resistant schizophrenia. The basis for that observation arises out of the primary judge’s contextual analysis of the evidence described at [156], [158], [159], [162], [163], [168], [169], [171], [179], [181], [186] and [187] of these reasons.
At [84], the primary judge observes that chronic schizophrenia is the outcome of the majority of those who suffer the illness. That observation is based upon the evidence derived from the literature referred to by his Honour.
The primary judge observes at [84] that there is evidence that aripiprazole can be used for the production of a medicament that is effective in the treatment of cognitive impairment caused by schizophrenia. The basis for that observation arises out of the primary judge’s contextual analysis of the evidence described at [175] to [184], [186] and [188] of these reasons.
The primary judge also observes that there was no dispute between the parties that the active ingredient of the GH products is aripiprazole.
The primary judge also observes that the degree of efficacy of aripiprazole in the treatment of cognitive impairment caused by schizophrenia is a matter of debate as between Professor Singh and Professor McGorry but the resolution of that debate is ultimately a matter for trial.
At [85], the primary judge observes that the evidence shows that aripiprazole is recommended for use as, and used for, first and second line treatment as well as a later line treatment for patients suffering from schizophrenia. That observation arises out of the primary judge’s contextual analysis of the evidence described at [169], [175] to [161], [184] to [188] and [212] and [213] of these reasons. The primary judge concludes that aripiprazole is used, on the evidence, as a medication for schizophrenic patients who fail to respond to antipsychotic drugs, including the first generation and other second generation antipsychotic compounds identified at claim 7(ii) of Patent 772. The primary judge had addressed the considerable evidence of “switching”, described earlier in these reasons.
At [94], the primary judge observes that the evidence shows that the GH products and the Abilify products are registered in the ARTG Register for “the treatment of schizophrenia including maintenance of clinical improvement during continuation therapy”. The primary judge observes that the products are therefore interchangeable or direct substitutes in terms of the registered indication or purpose. The primary judge gave emphasis to the fact that such use is the only “indicated use” in the Register for the GH products and thus, on the evidence, the GH products could not be said to have “various uses” beyond the indicated use.
The primary judge also observed that the evidence did not suggest that the GH products would be “traded commercially for various uses”.
The primary judge also notes at [95] the evidence of Professor McGorry on the notion inherent in the words “including maintenance of clinical improvement during continuation therapy” as used as a registered indication for the GH products. Professor McGorry said that the phrase means, the longer‑term treatment of schizophrenia required to maintain control of positive symptoms and that continuation therapy is the administration of antipsychotic medication in a dosage that is as low as possible so as to maintain the patient’s response or remission from positive symptoms. Professor McGorry considered that if the treatment results in any other benefit in treating the negative symptoms and other domains of schizophrenia then that benefit is seen by Professor McGorry as “a bonus”.
At [95], the primary judge notes the acceptance by Professor McGorry that it is “not uncommonly the case” that the negative symptoms and other domains of schizophrenia are treated in continuation therapy with an antipsychotic agent.
At [96], the primary judge notes that Professor Singh described the longer‑term treatment of patients as being aimed at maintaining the control of positive symptoms and countering negative symptoms and cognitive impairment, with the result that the primary judge understood Professor Singh to be placing “some greater importance on the treatment of negative symptoms and cognitive impairment” using antipsychotic drugs in continuation therapy, than the views of Professor McGorry.
Having assessed the evidence of Professor McGorry and Professor Singh on this topic in the context of all of the evidence, the primary judge concluded at [97] that the evidence before him supported the conclusion, on a prima facie basis, that “the treatment of schizophrenia comprehends the treatment of all of its symptoms and domains, notwithstanding Professor McGorry’s emphasis on the treatment of positive symptoms” and “[a]ripiprazole is used for that range of treatment with respect to schizophrenia”.
At [98], the primary judge said this:
I am satisfied that there is a prima facie case on the present state of the evidence that the GH products would be used for purposes that include the treatment of cognitive impairment caused by chronic schizophrenia or treatment‑resistant schizophrenia, including where a patient fails to respond to other antipsychotic drugs selected from those identified in claim 7 and [Generic Health] has reason to believe that the GH products would be put to that use …
The concluding words of [98] of the primary judge’s reasons reflect a finding that a prima facie case is made out in relation to Generic Health’s “reason to believe”, for the purposes of s 117(1) and (2)(b). Generic Health contends, first, that no part of the exposed reasons of the primary judge contain an analysis of the basis upon which the primary judge could be or was satisfied that Generic Health had reason to believe the relevant matters and, secondly, no affirmative evidence was put before the primary judge that Generic Health had reason to believe that the GH products would be put to an infringing use having regard to the integers of claim 7 of Patent 772.
More particularly, Generic Health says that while the evidence might suggest that aripiprazole may be deployed by clinicians when circumstances of “switching” might be required to meet the needs of a patient (in cases of a particular failure of the patient to respond to one or more first or second generation antipsychotic drugs) so as to treat negative symptoms of schizophrenia or symptoms of cognitive impairment as Professor Singh suggests both in his evidence on switching and in relation to continuation therapy, there is nothing in the evidence to suggest that first, a patient’s cognitive impairment disorder, so treated, was caused by the claim 7(i) causes or secondly, that aripiprazole was used consequent upon a failure of the patient to respond to two or more of the claim 7(ii) drugs, rather than some other less specific failed drug treatment (use) regime.
Generic Health says that unless there is evidence that all of the integers of claim 7 are engaged concerning the use of the GH products, there is no objectively demonstrated reason for Generic Health to believe that the GH products would be put to the claim 7 infringing use.
Generic Health says that although a clinician treating a patient suffering from cognitive impairment disorder caused by, for example, chronic schizophrenia or treatment‑resistant schizophrenia might switch the patient from one of the 12 drugs recited in claim 7(ii) (then being prescribed) to aripiprazole after a failure of the patient to respond to at least two (and the parties accept that claim 7 requires a failure of at least two of the para (ii) drugs) or more, of the para (ii) drugs, the evidence does not objectively demonstrate that clinicians have adopted a practice (giving rise to a real likelihood of particular use) of prescribing the use of aripiprazole for patients suffering from cognitive impairment disorder (caused in one of the para (i) senses) after a demonstrated failure in the use of two or more of the para (ii) drugs. In the absence of such a practice or real likelihood, Generic Health has, it is said, no objective reason to believe that the GH products would be put to a claim 7 infringing use.
Generic Health also says that it was not actually aware that the GH products would be put to an infringing claim 7 use.
The finding of a prima facie case of Generic Health having a reason to believe that the GH products would be put to an infringing use rests on all of the considerations at [83] to [85] and [94] to [99] of the primary judge’s reasons and the evaluation of the evidence upon which those paragraphs depend, as earlier described.
The primary judge took the following matters into particular account either directly or as a matter of inference drawn from the evidence.
First, Generic Health is a pharmaceutical company that supplies generic pharmaceutical products and other products. It commenced operating in 2004 and its business model involves the supply of low cost, high volume generic medicines to pharmacists and hospitals throughout Australia. In that sense, Generic Health is, objectively viewed, an interested observer of factors relevant to the use of its GH products supplied to pharmacists and hospitals for re‑supply to patients for the indicated use.
Second, the active ingredient of the GH products is aripiprazole.
Third, Generic Health has registered the GH products containing the aripiprazole compound in the Register for “the treatment of schizophrenia including maintenance of clinical improvement during continuation therapy”. The evidence before the primary judge demonstrates that aripiprazole can be, and is used, as a medicament, that is effective in the treatment of cognitive impairment caused by schizophrenia including cognitive impairment caused by chronic schizophrenia or treatment‑resistant schizophrenia.
Fourth, having regard to the evidence of Professor Singh, the maintenance of clinical improvement during continuation therapy involves maintaining the control of positive symptoms and the countering of negative symptoms and cognitive impairment with the result that the evidence supports the conclusion that the treatment of schizophrenia in continuation therapy comprehends the treatment of all of its “symptoms and domains”.
Fifth, aripiprazole is used for all of the symptoms and domains of schizophrenia.
Sixth, Generic Health has registered its GH products in the Register for only an indication that precisely corresponds with the first of the indications for which the Abilify products are registered, and in that sense, the GH products are “interchangeable” with the Abilify products for this indication and purpose. No other indication is recorded in the Register for the GH products.
Seventh, Generic Health must be taken, objectively, to have reason to understand that its GH products as registered are interchangeable with (or substitutes for) the Abilify products. On the evidence before the primary judge, the GH products do not have other “indicated uses” and the evidence does not suggest that the GH products would be traded commercially for “other uses”.
The question of whether Generic Health had reason to believe, objectively viewed, that the GH products would be put to a claim 7 infringing use is to be assessed having regard to the nature of the products, their use at least as reflected in the public Register identifying Generic Health’s indication of the use to which the products can be put properly, and the nature of the undertaking conducted by Generic Health. Since Generic Health, acting reasonably, must be taken to understand the use of the GH products reflected in the indication contained in the Register, and the evidence before the primary judge in support of use, in fact, has given content to that use as a claim 7 use, the evidence supports the conclusion that objectively viewed Generic Health had reason to believe that its GH products containing aripiprazole would be used or deployed by clinicians for use by patients in the circumstances of the integers of claim 7 of Patent 772.
The evidence before the primary judge supported a finding of a prima facie case that, on all of the evidence analysed by the primary judge, a use of the GH products by a person in Australia would infringe claim 7 of Patent 772 and the supply of the GH products to persons in Australia is an infringement of claim 7 of Patent 772 as Generic Health had reason to believe that its products would be put to use in treating patients suffering from cognitive impairment caused by either chronic schizophrenia or treatment‑resistant schizophrenia in circumstances where those patients had failed to respond to two or more of the antipsychotic drugs listed in para (ii) of claim 7 of Patent 772.
At [100] to [104], the primary judge dealt with the question of whether a prima facie case had been made out of the contravention of s 117(1) having regard to s 117(2)(c) which is concerned with use of a product “in accordance with any instructions for the use of a product”, or any inducement to use the product, given to the person by the supplier or contained in an advertisement published by or with the authority of the supplier. The primary judge considered the application of these provisions to facts relating to the question of whether prescribing doctors would read into the supplier’s Product Information, an instruction that the GH products are to be used or can be used in the method of treatment specifically claimed in Claim 7. The primary judge observed at [103]: “Certainly the Product Information does not give that instruction or inducement expressly”. In the context then of s 117(2)(c), the primary judgment also observed that “it is not sufficient that prescribing doctors will or might use the GH products for a method of treatment as so claimed”. The primary judge observed that s 117(2)(c) requires there to be an instruction or an inducement.
These observations at [103] are said to be inconsistent with earlier observations made in the context of s 117(2)(b). However, the observations at [103] are confined to Product Information instructions. The point of the earlier findings is that the primary judge gave emphasis to the fact that the only ARTG registered use for the GH products was the same use as that for which the Abilify products are registered and, on the state of the evidence, the GH products could not be said to have “various uses” beyond the indicated use (see [94] of the primary judge’s reasons). The matters at [103] provide no answer to the prima facie findings in relation to s 117(1) and s 117(2)(b).
Two other questions remain.
The first concerns the question of whether, in a methodological sense, the primary judge failed to have proper regard to settled principle governing the determination of whether a prima facie case had been made out, and the discretionary considerations to be taken into account in the grant or withholding of interlocutory relief.
The primary judge sets out an assessment of the organising principles at [78] to [82].
In particular, the primary judge had regard to the considerations extensively discussed by the Full Court of this Court in Samsung Electronics Co Limited v Apple Inc [2011] FCAFC 156.
The primary judge observed that it was not necessary to recite those principles in detail and said that it was sufficient to note that when considering an application for an interlocutory injunction, the Court must address itself to two main inquiries of whether the applicant for relief has established a prima facie case in the sense explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) (Beecham) 118 CLR 618 at 622‑623, and whether the balance of convenience and justice favours the grant or refusal of the relief. Moreover, the primary judge took into account the organising principles discussed by Gummow and Hayne JJ in Australian Broadcasting Corporation v O’Neill (O’Neill) (2006) 227 CLR 57 at [65] to [72].
The primary judge observed that a prima facie case does not mean that the applicant must show that it is more probable than not that it will succeed at trial, but rather the burden for the applicant is to demonstrate a sufficient likelihood of success to justify, in the circumstances of the case, the preservation of the status quo pending the trial of the action. The primary judge correctly observed, derived from Beecham and O’Neill, that the question of how strong the probability needs to be in order to demonstrate a sufficient likelihood of success depends upon the nature of the rights being asserted by the applicant and the practical consequences likely to flow from the order, if made.
At [80], the primary judge returned to some of the considerations discussed by the Full Court in Samsung and observed that at [61] of the Full Court’s reasons, the Court had discussed the requirement that in order to obtain an interlocutory injunction the applicant must demonstrate that if no injunction is granted it will suffer irreparable injury for which damages will not be adequate compensation. The primary judge noted the Full Court’s observation to the effect that regardless of whether “irreparable harm” is properly considered as a matter to be addressed in the Court’s consideration of the balance of convenience and justice, (rather than as a distinct and antecedent consideration), the assessment of prejudice or harm to the applicant, if there be no injunction, and the assessment of prejudice or harm to the defendant, if an injunction is granted, is “at the heart of the basket of discretionary considerations which must be addressed and weighed”.
The primary judge also observed that the notion of irreparable harm contemplates harm for which damages would not be adequate compensation.
Returning to Samsung, the primary judge noted that the Full Court at [62] had said that the question of whether damages will be an adequate remedy for the alleged infringement of the applicant’s rights involves an assessment by the Court of whether, absent an injunction, the applicant would in all material respects be in as good a position if confined to a remedy in damages.
Further, the primary judge recognised that it is well recognised that the issue of whether the applicant has made out a prima facie case, and the question of balance of convenience and justice, are necessarily related inquiries (Samsung at [67]; Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth (2009) 81 IPR 339 at [15]) and, in short, the apparent strength of the parties’ substantive cases will often be an important consideration to be weighed in the balance.
At [143] to [182], the primary judge considers all of the factors to be taken into account in weighing the balance of convenience and the interests of justice.
I do not propose to closely examine all of those matters in these reasons. I am satisfied that the primary judge has properly identified the principles governing the granting or withholding of interlocutory relief and has weighed all of the considerations relevant to the question of where the balance of convenience lies and where the interests of justice lie.
By Ground 10 of the proposed Amended Notice of Appeal for which leave was sought, Generic Health contends that the primary judge erred by failing to assess the strength of the probability of ultimate success on the part of the respondents and failed to identify a sufficient probability of success to justify, in the circumstances of the case, the grant of an interlocutory injunction pending trial.
I reject that contention.
The primary judge has carefully examined all of the evidence, identified and taken into account all of the relevant principles, and has assessed the strength of the probability of success in the sense of seeking to determine whether a sufficient probability of success is made out. To the extent that it is suggested that the primary judge has departed from the considerations identified by the Full Court of this Court in Samsung, in which consideration is given by the Full Court to the methodological application of the principles derived from the High Court decisions in Beecham and (the organising principles identified) in O’Neill, I am satisfied that the primary judge has not departed from those principles.
Although the primary judge has not found it necessary to recite the principles in detail, the passages I have referred to seem to me to make it clear that the primary judge was familiar with the relevant principles, isolated them correctly and applied them in a way consistent with settled principle. It should also be remembered that the primary judge was a member of the Full Court in Samsung which was constituted by Dowsett, Foster and Yates JJ.
One final matter concerning Ground 10 of the appeal should be noted.
Generic Health in contending that the primary judge failed to assess the strength of the probability of ultimate success at trial of the case relied upon by the respondents, contended that the primary judge had failed to conduct an “evaluative analysis” of the strength of the prima facie case as required by Samsung. However, the primary judge was expressly conscious of the need to form a view about the apparent strength of the substantive case advanced by the applicant respondents.
In Beecham, Kitto, Taylor, Menzies and Owen JJ observed (at (1968) 118 CLR 618 at 622) that the strength of the probability of success depends, no doubt, upon the nature of the rights asserted and the practical consequences likely to flow from the order sought. If the case is that class of case where the practical consequence of granting an interlocutory injunction is that the order will, for all practical purposes, determine the outcome of the substantive controversy, the depth and scope of the assessment or evaluation of the probability of success informing the exercise of the discretion will likely be greater than that class of case where the making of the interlocutory injunction does not have such a practical consequence.
However, lest there be any doubt about the matter, Beecham makes it plain at p 622 and O’Neill affirms it to be so as part of the organising principles governing the exercise of the discretion to grant or withhold the making of an interlocutory injunction (at [65] to [72] and [19]), that in every case in which an interlocutory injunction is sought the primary judge must form a view about the strength of the probability of the plaintiff succeeding at trial having regard to the case advanced at the interlocutory hearing.
How strong the probability needs to be will depend upon the matters already mentioned, namely, the nature of the rights asserted and the practical consequences likely to flow from the order sought by the applicant. However, there is no authority in the High Court for the proposition that in exercising the discretion according to settled principle (Beecham and O’Neill), a primary judge need only form a view about the strength of the probability of success in that class of case where the practical consequence of making the interlocutory order will determine the outcome of the substantive controversy. The point about such a practical consequence is that the depth, scope and scale of the assessment of the probability of success is likely to be significantly different to the nature of the assessment made where the interlocutory order will not have that particular practical consequence.
In that sense, I respectfully disagree with Emmett J in the absolute way his Honour has expressed the principle at [26]. There is necessarily a question of emphasis involved in making the assessment having regard to the class of case presented to the primary judge.
Ultimately, a qualitative assessment must be made by the primary judge of the strength of the probability of success and, as the High Court observes in Beecham, as affirmed by O’Neill, the emphasis in that assessment will take account of both the nature of the rights asserted and the practical consequences likely to flow from the order sought by the applicant for the relief. There is no proper basis for, and nor is it desirable to, narrow the broad sweep of those two important considerations by adopting a default rule that the primary judge need only consider the strength of the applicant’s probability of success at trial in that class of case where the interlocutory order will determine the outcome of the controversy overall. The primary judge ought to have the greatest flexibility in applying the tests according to the circumstances of the particular case. Where the practical consequence likely to flow from making the orders sought by the applicant (or not making the orders) is, in substance, the determination or practical resolution of the controversy over all, the primary judge will, as a matter of emphasis, engage in greater depth, scope and scale, in an assessment of the strength of the probability of success, than would be likely to be the case where such a practical consequence does not arise.
Nevertheless, in the latter class of case, a view must be formed by the primary judge about the strength of the probability of the plaintiff succeeding at trial but the burden and depth of that assessment will be of a different quality and kind than the assessment appropriate to the former class of case.
In this case, the primary judge was conscious of the need to form a view about the strength of the probability of success at trial of the case made by the respondents as applicants and the primary judge made an evaluation of the strength of the probability of that success in the context of an appreciation of the nature of the rights asserted by the respondents and the practical consequences likely to flow from the making of the order. In this case, a proper contextual reading of the reasons of the primary judge demonstrates that throughout the course of the primary judge’s analysis of the evidence, his Honour was constantly and incrementally informing himself of the quality of the evidence and the strength of the probability of the applicant’s success in the proceeding (or not), as framed by the evidence. Whilst I accept that the primary judge has not, in terms, separately addressed detailed reasons to the express topic of the strength of the applicant’s probability of success, it seems clear to me that the primary judge was informing himself about that question as his Honour evaluated all of the evidence. Moreover, his Honour expressly turned his mind to the obligation to form a view about the strength of the probability of success.
There can be no suggestion that the primary judge was not astute to the obligation to form a view about the strength of the applicant’s probability of success in exercising the discretion.
There is no demonstrated error on the part of the primary judge.
The second remaining question concerns the scope of the interlocutory orders.
As to this question, I agree with the observations of Emmett J at [39] to [43] of his Honour’s reasons.
Fundamentally however, it seems to me that the question is answered by recognising that once a prima facie case of infringement is made out for the purposes of s 117(1) having regard to s 117(2)(b), the conduct on the part of Generic Health which, under the section, “is an infringement of the patent by the supplier” is “the supply” of the product. Section 3 together with Schedule 1 of the Patents Act has the effect of defining supply as including: “(a) supply by way of sale, exchange, lease, hire or hire‑purchase; and (b) offer to supply (including supply by way of sale, exchange, lease, hire or hire‑purchase”. The question then is whether interlocutory orders ought to be framed which provide remedial protection in relation to the conduct of supply as defined and conduct properly regarded as forming part of the conduct of supply. The interlocutory orders are framed (see [132] of these reasons) in terms of restraining Generic Health from offering to sell or otherwise dispose of the products; importing the products; keeping the products and authorising others to engage in any of those acts. The first class of conduct involves supply directly and the second and third classes of conduct are aspects of, or incidental to, threatened supply.
I am satisfied that the scope of each of the interlocutory orders is appropriate once it is recognised that a prima facie case of infringement of s 117(1) is made out having regard to all of the relevant factors discussed in these reasons.
I certify that the preceding one hundred and thirty-two (132) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate:
Dated: 6 March 2013
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