H Lundbeck A/S v Sandoz Pty Ltd

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HIGH COURT OF AUSTRALIA

KIEFEL CJ,
GAGELER, EDELMAN, STEWARD AND GLEESON JJ

Matter No S22/2021

H. LUNDBECK A/S & ANOR  APPELLANTS

AND

SANDOZ PTY LTD  RESPONDENT

Matter No S23/2021

CNS PHARMA PTY LTD  APPELLANT

AND

SANDOZ PTY LTD  RESPONDENT

H. Lundbeck A/S v Sandoz Pty Ltd

CNS Pharma Pty Ltd v Sandoz Pty Ltd

[2022] HCA 4

Date of Hearing: 8 October 2021

Date of Judgment: 9 March 2022

S22/2021 & S23/2021

ORDER

In Matter No S22/2021:

1.Appeal allowed with costs.

2.Set aside orders 1, 2 and 3 made on 4 August 2020 and orders 1 and 2 made on 30 March 2021 of the Full Court of the Federal Court of Australia and, in their place, order that:

(a)the appeal and cross-appeal from the orders of the primary judge made on 19 February 2019 each be allowed in part;

(b)declare that the second respondent did not have rights to bring proceedings under s 79 of the Patents Act 1990 (Cth);

(c)orders 2 and 3 made by the primary judge on 19 February 2019 be set aside; 

(d)declare that the first respondent is entitled to damages and pre-judgment interest calculated thereon;

(e)the matter be remitted to the primary judge for the recalculation of damages and pre-judgment interest payable to the first respondent;

(f)the parties be given liberty to apply to the primary judge for a stay of the remitted proceedings pending the determination of the proceedings relating to the licence granted to the appellant by the Commissioner of Patents on 11 April 2019 under s 223(9) of the Patents Act 1990 (Cth);

(g)the appellant pay the respondents' costs to date in the proceedings before the primary judge, and costs of the appeal and cross-appeal to the Full Court of the Federal Court of Australia; and

(h)the appeal and cross-appeal be otherwise dismissed.

In Matter No S23/2021:

Appeal dismissed with costs.

On appeal from the Federal Court of Australia

Representation

A J L Bannon SC with L Merrick and C I Cunliffe for the appellants in each matter (instructed by Corrs Chambers Westgarth)

C Dimitriadis SC and A R Lang SC for the respondent in each matter (instructed by Clayton Utz)

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

  1. KIEFEL CJ, GAGELER, STEWARD AND GLEESON JJ.   These two appeals from decisions of the Full Court of the Federal Court (Nicholas, Yates and Beach JJ)[1], each on appeal from a judgment of a single judge of that Court (Jagot J)[2], constitute another instalment in long-running serial litigation concerning the extension under the Patents Act 1990 (Cth) ("the Act") of the term of a standard patent relating to a pharmaceutical substance known as escitalopram ("the Patent").

    [1]Sandoz Pty Ltd v H LundbeckA/S (2020) 384 ALR 35; Sandoz Pty Ltd v H LundbeckA/S [No 2] [2021] FCAFC 47.

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Details
Case
[2022] HCA 4
Decision Date

CaseChat Overview and Summary

The High Court of Australia considered an appeal and cross-appeal concerning patent infringement and misleading or deceptive conduct. The dispute arose from a settlement agreement between H Lundbeck A/S (appellant) and Sandoz Pty Ltd (respondent) regarding a patent. A clause in the settlement agreement granted Sandoz a non-exclusive licence to exploit the patent, but this licence did not specify an end date. The patent's term was subsequently extended under the *Patents Act 1990* (Cth). Lundbeck, as the patentee and exclusive licensee, brought infringement proceedings against Sandoz for acts occurring during this extended term.

The central legal issues before the High Court were: (1) whether the non-exclusive licence granted to Sandoz applied to acts performed during the extended term of the patent; (2) whether the exclusive licensee had the right to bring infringement proceedings under section 79 of the *Patents Act 1990* for acts done during the extended term; and (3) whether Sandoz engaged in misleading or deceptive conduct by failing to disclose to its customers the possibility that the patent term might be extended. The Court also considered when a patentee's cause of action accrued for the purposes of section 51A(1)(a) of the *Federal Court of Australia Act 1976* (Cth).

The High Court reasoned that the non-disclosure of the remote possibility of a patent extension did not constitute misleading or deceptive conduct. The Court distinguished between an implied representation that parties are legally entitled to use a product and an implied representation that there is only a remote possibility of future patent proceedings. The remoteness of the possibility meant that Sandoz's sales did not involve misleading or deceptive conduct. The Court also addressed the rights of an exclusive licensee to bring infringement proceedings during an extended patent term, ultimately allowing the appeal in part and setting aside certain orders of the Full Court.

In Matter No S22/2021, the appeal was allowed with costs, and the orders of the Full Court were set aside and replaced with new orders. These included declarations that the second respondent did not have rights to bring proceedings under s 79 of the *Patents Act 1990*, that the first respondent was entitled to damages, and that the matter be remitted for recalculation of damages. In Matter No S23/2021, the appeal was dismissed with costs.

Orders

Orders of the court

In Matter No S22/2021:

1. Appeal allowed with costs.

2. Set aside orders 1, 2 and 3 made on 4 August 2020 and orders 1 and 2 made on 30 March 2021 of the Full Court of the Federal Court of Australia and, in their place, order that:

(a) the appeal and cross-appeal from the orders of the primary judge made on 19 February 2019 each be allowed in part;

(b) declare that the second respondent did not have rights to bring proceedings under s 79 of the Patents Act 1990 (Cth);

(c) orders 2 and 3 made by the primary judge on 19 February 2019 be set aside;

(d) declare that the first respondent is entitled to damages and pre-judgment interest calculated thereon;

(e) the matter be remitted to the primary judge for the recalculation of damages and pre-judgment interest payable to the first respondent;

(f) the parties be given liberty to apply to the primary judge for a stay of the remitted proceedings pending the determination of the proceedings relating to the licence granted to the appellant by the Commissioner of Patents on 11 April 2019 under s 223(9) of the Patents Act 1990 (Cth);

(g) the appellant pay the respondents' costs to date in the proceedings before the primary judge, and costs of the appeal and cross-appeal to the Full Court of the Federal Court of Australia; and

(h) the appeal and cross-appeal be otherwise dismissed.

In Matter No S23/2021:

Appeal dismissed with costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

KIEFEL CJ, GAGELER, STEWARD AND GLEESON JJ EDELMAN J (dissent)
The primary judge found that the possibility that the term of the Patent might be extended was remote at the time of the settlement agreement in February 2007[142]. Her Honour did not suggest that this possibility was any more likely at the time of Sandoz's sales to pharmacists in June 2009. For this reason, Pharma did not establish at trial that the existence of the remote possibility was a sufficiently material qualification to any implied representation that Sandoz's products did not infringe any patent to have the effect that the non‑disclosure of that qualification could be misleading or deceptive. There is a distinction between (i) an implied representation that medical practitioners, pharmacists, and patients are legally entitled to prescribe, dispense, or use a pharmaceutical product when they may not presently be so entitled[143], and (ii) an implied representation that such persons are so entitled but that there is a remote possibility that a future extension to the term of a patent might permit proceedings to be brought against them. Any implied representation to pharmacists by Sandoz would fall within the second category. The remoteness of the possibility is such that the sales by Sandoz did not involve any misleading or deceptive conduct by Sandoz.[142]H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 483 [290]‑[291].[143]See, eg, Sanofi-Aventis Australia Pty Ltd v Apotex Pty Ltd [No 3] (2011) 196 FCR 1 at 81 [276], 83 [281].Conclusion Orders should be made as proposed in the joint judgment.

Ratio Decidendi

Legal Principle Established

Established by: KIEFEL CJ, GAGELER, STEWARD AND GLEESON JJ,

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