Les Laboratoires Servier v Apotex Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Les Laboratoires Servier v Apotex Pty Limited [2010] FCAFC 131

Citation: Les Laboratoires Servier v Apotex Pty Limited [2010] FCAFC 131
Appeal from: Apotex Pty Limited v Les Laboratoires Servier (No 2) [2009] FCA 1019
Parties: LES LABORATOIRES SERVIER v APOTEX PTY LIMITED
File number(s): NSD 1036 of 2009
Judges: EMMETT, KENNY AND STONE JJ
Date of judgment: 11 November 2010
Catchwords:

PATENTS – amendment to claims under s 105 of the Patents Act 1990 (Cth) - whether claims fairly based on the matter in the body of the specification as required by s 102 of the Patents Act

PATENTS – judicial discretion to refuse leave to amend under s 105 of the Patents Act – whether primary judge’s discretion miscarried – disclosure of patentee’s reasons for seeking amendment – effect of patentee’s delay in seeking amendment under s 105 of the Patents Act
Legislation: Federal Court Rules O 58 r 8 & O 58 r 10(4)
Patents Act 1990 (Cth) ss 40, 102, 104, 105 & 112
Cases cited: Bristol Myers Company v Manon Freres Ltd [1973] RPC 836
Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397
House v The King (1936) 55 CLR 499
Hsiung’s Patent [1992] RPC 497
Kimberly-Clark Worldwide Inc v Procter & Gamble Ltd  [2000] RPC 422
Lockwood Security Products Pty Limited v Doric Products Pty Limited (2004) 217 CLR 274
Mallet v Mallet (1984) 156 CLR 605
Matbro Ltd v Michigan (Great Britain) Ltd [1973] RPC 823
Norbis v Norbis (1986) 161 CLR 513
Novartis AG v Bausch & Lomb (Australia) Pty Ltd (2004) 62 IPR 71
Smith Kline & French Laboratories Limited v Evans Medical Limited [1989] 1 Fleet Street Reports 561
Vector Corp v Glatt Air Techniques Ltd [2007] RPC 255
Wimmera Industrial Minerals Pty Ltd v RGC Mineral Sands Ltd (No 2) (1997) 74 FCR 306
Wimmera Industrial Minerals Pty Ltd v RGC Mineral Sands Ltd (No 3) (1997) AIPC 91-366
Date of hearing: 11-12 February 2010
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 103
Counsel for the appellant: B.N. Caine SC, A.J. Ryan SC & C.L. Cochrane
Solicitor for the appellant: Allens Arthur Robinson
Counsel for the respondent: D.K. Catterns QC & N.R. Murray
Solicitor for the respondent: Freehills

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1036 of 2009
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN:

LES LABORATOIRES SERVIER
Appellant
AND:

APOTEX PTY LIMITED
Respondent

JUDGES:

EMMETT, KENNY AND STONE JJ

DATE OF ORDER:

11 November 2010

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The appellant be granted leave to appeal.

2.The appeal be dismissed.

3.The appellant pay the respondent’s costs of the application for leave and of the appeal.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH…

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Details
Case
[2010] FCAFC 131
Decision Date

CaseChat Overview and Summary

Les Laboratoires Servier, the appellant, sought leave to appeal a decision of Emmett J, which dismissed its application for leave to amend its patent under s 105 of the Patents Act 1990 (Cth). Apotex Pty Ltd, the respondent, opposed the application for leave to appeal. The dispute centred on whether the primary judge had miscarried in his discretion to refuse Servier's application for leave to amend its patent, particularly in light of the validity issues that arose from proceedings in the United Kingdom. The Federal Court of Australia was tasked with determining whether the primary judge's exercise of discretion was erroneous and whether the proposed amendments were allowable under s 102 of the Patents Act.

The legal issues before the court included whether Servier had fully and frankly disclosed its reasons for seeking the amendment, the impact of Servier’s delay in seeking the amendment, and the validity of the proposed amendments under s 102 of the Patents Act. The court also needed to decide if the primary judge’s discretion to refuse leave to amend had been exercised improperly.

The court found that the primary judge did not miscarry in his discretion. Servier had not made a full and frank disclosure of its reasons for seeking the amendment, particularly concerning the validity issues arising in the UK proceedings. The primary judge’s findings on this matter were open to him and not erroneous. Furthermore, the court noted that the proposed amendments were not allowable under s 102 of the Patents Act, as they did not fairly disclose the matter in the body of the specification. Consequently, the court held that the primary judge’s decision to deny leave to amend was correct, and there was no need to address the issue of the validity of the claims. The appeal was dismissed, and Servier was ordered to pay Apotex’s costs of the application for leave and of the appeal.

Orders

Orders of the court

1. The appellant be granted leave to appeal.

2. The appeal be dismissed.

3. The appellant pay the respondent’s costs of the application for leave and of the appeal.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In the circumstances of this case, the preferable course may have been to defer dealing with the application under s 105 until the question of validity has been fully explored. That would enable a full exploration of the motives of Servier in seeking the amendment at the time when it first sought amendment. In any event, having regard to my conclusion that the proposed amendments are not allowable, it is unnecessary to determine whether, if the amendments had been allowable, they should nevertheless be refused in the exercise of the Court’s discretion.CONCLUSION The appropriate course is to grant leave to appeal and to dismiss the appeal on the ground raised by the foreshadowed notice of contention. Servier should pay Apotex’s costs of the application for leave and of the appeal. We have had the opportunity to read in draft the reasons prepared by Emmett J, and we agree with the orders his Honour proposes. Having regard to the principles discussed in Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 399 and regularly applied in this Court, we would grant the appellant, Les Laboratoires Servier (‘Servier’), leave to appeal. We would dismiss the appeal, however, on the ground that Servier has not established that the primary judge’s exercise of discretion under s 105 of the Patents Act 1990 (Cth) miscarried. We would therefore not reach the respondent’s notice of contention and the s 102 issues addressed in Emmett J’s reasons. The relevant facts have been set forth in Emmett J’s reasons. In what follows, we repeat them only where necessary to explain our conclusion that the primary judge did not err in denying the appellant’s request for leave to amend under s 105. Section 105 empowers the court to direct amendment of a patent in any “relevant proceedings” in relation to the patent, on the application of the patentee. Relevant proceedings are court proceedings for patent infringement, patent revocation, or in which the validity of the patent, or of a claim, is in dispute: see Patents Act, Schedule 1. The power conferred by s 105 is discretionary, save for s 105(4), which provides that the court must not direct an amendment that is not allowable under s 102. The court must, of course, exercise discretionary power judicially. RELEVANT PRINCIPLES The principles governing appeals against discretionary judgments at first instance are well known. These principles were stated in House v The King (1936) 55 CLR 499 at 504-505 as follows:It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.See also, e.g., Norbis v Norbis (1986) 161 CLR 513 and Mallet v Mallet (1984) 156 CLR 605. The discretionary judgments to which the principles in House v The King apply “call for value judgments in respect of which there is room for reasonable differences of opinion, no particular opinion being uniquely right”: Norbis 161 CLR at 518. In Norbis, Mason and Deane JJ explained (161 CLR at 518-19):If the questions involved lend themselves to differences of opinion which, within a given range, are legitimate and reasonable answers to the questions, it would be wrong to allow a court of appeal to set aside a judgment at first instance merely because there exists just such a difference of opinion between the judges on appeal and the judge at first instance. In conformity with the dictates of principled decision-making, it would be wrong to determine the parties’ rights by reference to a mere preference for a different result over that favoured by the judge at first instance, in the absence of error on his part. According to our conception of the appellate process, the existence of an error, whether of law or fact, on the part of the court at first instance is an indispensable condition of a successful appeal.

Ratio Decidendi

Legal Principle Established

We do not propose to deal with Servier’s appeal grounds individually, going through the challenged paragraphs of her Honour’s reasons on a line-by-line basis. Rather, following the parties’ submissions, Servier’s various grounds can be grouped into four main points. First, the grounds focussing on paragraphs [113], [115], [117], [118], [124] and [126] of the reasons all attack the primary judge’s overriding view that Servier advanced an explanation for amendment that was significantly less than a full and frank disclosure of its true reasons for amendment. Secondly, the challenge to paragraph [114] of the reasons contests her Honour’s assessment of Servier’s delay in seeking amendment. Thirdly, the objection to paragraph [128] of the reasons, although it overlaps with the first and second points, focuses on the primary judge’s characterization of Servier’s conduct in relation to the s 104 application, particularly its decision to seal the patent. Finally, in objecting to paragraph [122], Servier argues that the primary judge made an erroneous finding as to whether the existing claims of the patent were fairly based on the specification, as required by s 40 of the Patents Act. As to this last point, although the issue was not specifically raised in the notice of appeal, Servier asserted in its submissions that, in determining the interlocutory amendment application, the primary judge improperly made a final ruling on an issue for the trial. CONSIDERATION Underlying the primary judge’s decision to deny Servier leave to amend was her Honour’s conclusion regarding the company’s motivation in seeking amendment. The primary judge concluded that part of Servier’s reason for seeking amendment was a specific, identifiable risk that the unamended patent might be found invalid based on particular issues arising in the UK proceeding. This conclusion was plainly open to her Honour, particularly in light of the email communication of 4 April 2007 between Servier and AAR, tendered by Apotex below, in which AAR stated that the amendments were “desirable in order to deal with validity issues raised in the UK”. The primary judge further found that Servier failed voluntarily to disclose this aspect of its reasons for seeking amendment to the Court “until, in effect, compelled to do so”. This is a reference to the fact that documents indicating that Servier was motivated by issues arising in the UK proceeding were disclosed to the Court only after the primary judge ordered that Servier give discovery to Apotex of solicitor-client communications relevant to its reasons for seeking amendment. The primary judge considered that Servier’s voluntary disclosures of its reasons for amendment, made primarily via two affidavits sworn by the company’s solicitor, Mr Hamer, were not a full and frank disclosure of Servier’s reasons for amendment (as found by her Honour) in relation to the validity issues raised in the UK proceeding. On the appeal, counsel for Servier sought to have us characterize Mr Hamer’s affidavits differently. It was, however, plainly open to her Honour to assess Mr Hamer’s affidavits as she did. This was not simply a case of affidavits that in hindsight could have been drafted more clearly. Rather, it was plainly open to her Honour to characterize them as a less than forthright statement of Servier’s reasons to amend. While this obfuscation may have been attributable in part to a desire to avoid waiver of client legal privilege, that possibility does not affect the fact that it was open to the primary judge to conclude that Servier failed properly to disclose its reasons as regards the validity issues. The relevance of the validity issues could probably have been revealed to the Court without the waiving of client legal privilege. If, however, it was not possible for Servier to disclose the relevant facts without waiving privilege, this did not transform Servier’s obligation into something less than full and frank disclosure.